PRIVATE BUSINESS

City of London (Ward Elections) Bill

Order for consideration, as amended, read.
	To be considered on Monday 28 January at 7 o'clock.

Oral Answers to Questions

TREASURY

Mr. Speaker: I am sure the House will understand why the Chancellor of the Exchequer is not here today. I know that Members will want me, on behalf of the House, to send him and his wife Sarah our sympathy and best wishes.

Hon. Members: Hear, hear. The Chancellor of the Exchequer was asked—

Euro

Desmond Swayne: When he last met the Governor of the Bank of England to discuss the exchange rate against the euro.

Andrew Smith: The Chancellor meets the Governor regularly, and they discuss a wide range of issues.

Desmond Swayne: That is a matter of great comfort. Ministers have previously said that they have no intention of entering an exchange rate mechanism between sterling and the euro. Will the Chief Secretary now rule out absolutely the question of an exchange rate mechanism prior to any arrangement for joining the euro?

Andrew Smith: We have made it clear that we have no intention of rejoining the exchange rate mechanism. I am happy to confirm that that is indeed the policy.

David Taylor: Following the letter in The Guardian this week from numerous Labour colleagues urging the Government to ignore the costly distraction of the euro, will the Chief Secretary discourage his more zealous Cabinet colleagues from trying to pre-empt the debate on this issue, especially given the fact that the five economic tests are increasingly as obscure and ambiguous as tests set by Edexcel?

Andrew Smith: There is no inconsistency between investment in high-quality public services and a policy on the euro that is in Britain's economic interests. The truth is that we are delivering on both, whereas the Conservative party could do neither.

Matthew Taylor: Will the Chief Secretary clarify an issue that seems to be dividing the Government? Does the Treasury maintain the view that the five tests can be answered clearly and unambiguously in economic terms, or is it a political test, as the chairman of the Labour party has suggested?

Andrew Smith: The five economic tests are clearly set out, and, as we have said time and again, it is our policy that it must be clearly and unambiguously in Britain's economic interests before we would recommend entry to Cabinet, to Parliament and in a referendum. When that recommendation is made, the issue will of course enter the political process and be the subject of political debate, but the economic tests must clearly and unambiguously be satisfied in the country's interest before we recommend entry.

John McFall: Does the Chief Secretary agree with me that we cannot have everything in this world, but that we do not want high interest rates, high unemployment and instability in finances, to which the shadow Chancellor is inextricably linked? We want low inflation, low unemployment rates and stability in public finances. Does my right hon. Friend agree that fiscal autonomy for individual member states is important? Will he and the Chancellor resist every attempt at harmonisation of taxes in Europe, ensure tax competition and that our policy delivers our economic stability and social justice objectives?

Andrew Smith: As I made clear in the Economic and Finance Council this week, the Government's priority is economic reform. As my hon. Friend says, we believe in tax competition, not tax harmonisation.

Peter Tapsell: It is meaningless for Ministers to go on saying that they will never join the exchange rate mechanism but that they hope to join the single currency in certain circumstances. If we were unwisely to join the single currency, we would, in effect, automatically be members of the exchange rate mechanism with no opportunity to get out of it, as we were able to do in 1992. Will the Chief Secretary take on board the fact that the concept that there might one day be a right rate of exchange at which sterling could join the euro is nonsense? The right rate of exchange for Britain changes from day to day, and from hour to hour. Would he accept that the economic crises that overtook Thailand and now Argentina stemmed primarily from the fact that their currencies were on a fixed rate to the dollar?

Andrew Smith: I thought that the leader of the Conservative party had urged his colleagues not to be monomaniacs on this issue, but it seems that they are not listening to him. As the Commission confirmed last week, flexibility on the ERM condition has been shown to other entrants to the euro in the past. I repeat that we have no intention of rejoining the ERM. The sustainability of exchange rates will be factored into the economic tests on the sustainability of convergence.

Jim Cousins: Is the present exchange rate with the euro, which has been sustained for about four years, consistent with the Government's longer-term policies for growth and rising employment?

Andrew Smith: As we have made clear, we do not maintain a running commentary on satisfying the five tests. That assessment will be undertaken rigorously, and only if it is in Britain's economic interests, unambiguously and clearly, will we join.

Adam Price: Has the Chief Secretary read the report of the Ernst and Young Item club of economic forecasters, published this week? It argues that there has never been a better time for the Government to adopt an active exchange rate policy to bring about a more competitive exchange rate.
	It is surely no coincidence that there has been virtually no growth in output and manufacturing since the pound appreciated five years ago. As the Secretary of State for Trade and Industry has said,
	"there is something fundamentally wrong in the current euro-pound exchange rate".
	Will the Government do something to make it right? Will they bring down the level of the pound by intervening in the exchange markets?

Andrew Smith: No, I have not read the report that the hon. Gentleman mentioned. As for what he says about the exchange rate, I have already made it clear that sustainability of convergence, one of the economic tests, would cover that.
	Let me tell the hon. Gentleman, and others who share his view, that attempts by this country in the past to steer the economy by means of exchange rates were an unmitigated disaster.

Michael Howard: Yesterday the Secretary of State for Trade and Industry said:
	"there is something fundamentally wrong in the current euro-pound exchange rate".
	Last week the Economic Secretary to the Treasury said:
	"The Government should not try artificially to massage down the level of the exchange rate, which is properly the outcome of sound economic fundamentals."—[Official Report, Westminster Hall, 15 January 2002; Vol. 378, c. 24WH.]
	Which of them is right?

Andrew Smith: My right hon. Friend the Secretary of State for Trade and Industry was rightly identifying the fact that manufacturers exporting to the eurozone are having to cope with the weakness of the euro. That is why we are taking steps to help manufacturing industry with the research and development tax credit and the cuts in business taxation. What is most important to manufacturing industry, as to other businesses, is that we continue to deliver a platform of economic stability. What manufacturers certainly do not need is a return to the 15 per cent. interest rates—for a whole year—and the 10 per cent. inflation that they experienced when the shadow Chancellor's party was in government.

National Health Service

Laura Moffatt: What changes he plans to NHS spending commitments.

Andrew Smith: As the Chancellor has previously announced, NHS resources in the UK are planned to reach £69.5 million by 2003–04. That represents an annual average increase of 5.7 per cent. in real terms over the period 2001–02 to 2003–04. Plans for future years will be set out in the 2002 spending review.

Laura Moffatt: Towns such as mine are having to cope with unprecedented spending on their public services, especially those provided by the national health service. Rightly, they—and I—want to hear from the Treasury team that the commitments are real and sustained, and will produce the public services that we so richly deserve. Is it not good to hear that spending is sustainable, and will benefit our communities?

Andrew Smith: I know how actively, energetically and effectively my hon. Friend has campaigned for health services on behalf of her constituents. She is entirely right. It is because the Government made the tough decisions required to establish the monetary and fiscal framework that the country needs, because we reduced the millstone of debt that we inherited from the Conservatives, because we placed the public finances on a sound basis and made the economic fundamentals strong, and because we are maintaining a platform of economic stability that we can and will sustain investment in our front-line services, which would be at risk if the Conservatives ever came near them.

Hugo Swire: Is the Chief Secretary concerned that the savings ratio has fallen by a third in the past year?

Andrew Smith: In fact, the savings ratio has been higher than the low point it reached under the—

Mr. Speaker: Order. The savings ratio has nothing to do with this question.

Andy Reed: Rightly, constituents compare the state of the NHS in this country with other parts of Europe. However, NHS funding here is much lower than elsewhere. Last year, the Chief Secretary confirmed to me in a parliamentary answer that Britain remains one of the lowest tax countries in Europe; it is third from bottom. When will we bring in the resources required from those most able to pay—higher rate taxpayers—to ensure that we have financial security for the NHS not just in the short term but in the long term?

Andrew Smith: The share of GDP invested in the NHS was 6.2 per cent. under the Conservatives. It has risen from 6.9 per cent. to 7.4 per cent. this year. It will be 7.6 per cent. next year and reach 7.7 per cent. in 2003-04 as we move towards achieving the European average. On my hon. Friend's comments on taxation, we will keep each and every promise on taxation in our manifesto, on which both of us fought the general election.

Michael Howard: I am afraid that if the hon. Member for Crawley (Laura Moffatt) wants an extra £200,000 for her hospital, she will have to ask rather more biting questions than she did a moment ago.
	Whose fault is it that the NHS underspent by £700 million last year?

Andrew Smith: The figure to which the shadow Chancellor refers is just 1.5 per cent. of the NHS budget. Last year's health underspend was lower than in just about any other Department. With end-year flexibility—this did not happen under the Conservative Government—Departments and agencies can carry forward money from one year to the next. A third of that money was specifically earmarked for expenditure which was known to be coming forward. The NHS plans to spend all the money that it has been allocated for this year.

Michael Howard: In view of last year's history, how can the Chief Secretary possibly explain the letter from the chief executive of the south east region of the NHS, in which she asks trusts in the region, including in my constituency, to reduce spending in the current year by £60 million? Is it not clear that, from top to bottom, despite the heroic efforts of the doctors and nurses who work in it, the NHS is in a state of crisis?

Andrew Smith: I understand that the pressures to which the shadow Chancellor refers arise from extra prescribing costs during the year. There is no doubt that his trust, along with every other trust, is getting a very substantial increase in resources under this Government: a real increase on average of 5.7 per cent. year on year, more than twice the level that was provided by the Conservatives. When the Leader of the Opposition accuses NHS staff of treating patients no better than dogs, that is a grotesque slur on NHS staff dedicated to the principles of a caring service.

Pensioners

Ashok Kumar: If he will make a statement on Government policy on tackling pensioner poverty.

Dawn Primarolo: The Government are committed to tackling pensioner poverty and helping those in greatest need. The Government introduced the minimum income guarantee and are committed to raising that in line with earnings throughout this Parliament. From 2003, the pension credit will ensure that those with a modest amount of savings stand to gain on average just over £400 a year.

Ashok Kumar: I thank my hon. Friend for that reply. Last week, I met the Cleveland pensioners convention forum. Pensioners told me that they support the Government strongly for all they are doing to tackle poverty among pensioners, but that they are concerned about one issue: nursing and personal care for the elderly. Given the recent decision by the Scottish Parliament to provide services free for the elderly, will my hon. Friend look at that issue again, so that my constituents can enjoy the same privileges as pensioners in Scotland?

Dawn Primarolo: I share, as I am sure do all hon. Members, the concern felt by my hon. Friend about the care of elderly people in our society. In England, the Government's key priority is to improve services for older people by promoting independence and minimising the need for institutional care. Overall, the Government will be making available an extra £1.4 billion a year for older people's services. That will emphasise the importance of maintaining the health and independence of older people, preventing unnecessary ill health, ensuring that health and social services are working in partnership and that older people have fair access to services, and making the funding fairer. The Government have decided that that is the best and quickest way to restore to older people the independence and the care that they say they so desperately want to be re-established.

Gregory Barker: Is the Minister proud of the dramatic increase in the number of pensioners forced on to means-tested benefits since the Government came to power?

Dawn Primarolo: I am proud that the Government have introduced the minimum income guarantee, raised pensions and established the £200 fuel allowance for pensioners. We are now spending around £6 billion a year extra on pensioners, which includes £2.5 billion more being spent on the poorest third of pensioners in our society. As I said, the pension credit to be introduced in 2003 will further increase the resources going to the very poorest. That is the way to tackle the poverty among pensioners that we inherited from the Conservative Government.

Diane Abbott: The Government's strategy to tackle pensioner poverty rests on the minimum income guarantee, which is a means-tested benefit. The widening use of such benefits is dubious enough anyway, but their use in relation to pensioners is especially doubtful. Successive Governments have found that, however much is spent on the take-up campaign, there will always be a substantial proportion of pensioners who are too proud to claim means-tested benefits. Does my hon. Friend agree that a strategy to counter pensioner poverty that rests on means-tested benefits always risks leaving a substantial number of pensioners in poverty?

Dawn Primarolo: As my hon. Friend will know, the Government are doing far more for pensioners in addition to the minimum income guarantee. The full state pension for a single pensioner will rise by £3 in April. That is on top of last year's increase of £5, £4.55 more than the normal inflation rise, and £2.10 more than the earnings link would have produced over those two years. In 2003, the annual basic state pension will rise by £100 for single pensioners. In the future, it will always increase by at least 2.5 per cent., even if the retail prices index is lower. I think that my hon. Friend would agree that, alongside the minimum income guarantee, the increase in the basic state pension that underpins our commitment to pensioners, and the annual £200 allowance to pensioners comprises the most effective, speedy and productive approach to ensuring that we tackle pensioner poverty.

Christopher Chope: The Minister's final statistics will not wash with pensioners because the Government are busy increasing pensioner poverty by pushing up council tax by three times the rate of inflation. Does the Minister realise that more than 1 million pensioners now have to pay more than 10 per cent. of their disposable income in council tax? I hope that the Minister believes that fuel poverty is unacceptable, so why are the Government creating council tax poverty?

Dawn Primarolo: That is truly breathtaking from a member of a party that introduced the poll tax, forcing millions of pensioners into long-term poverty to pay it, put VAT on fuel for pensioners and denied decent rises in the basic state pension to every pensioner in the country. Pensioners are better off under the policies that the Government are pursuing and it is about time that the hon. Gentleman recognised that.

John Robertson: The Minister will be aware that my constituency has one of the highest concentrations of people over 60 not only in the United Kingdom but in Europe. Nearly a third of the electorate is over the age of 60. Although we have the minimum income guarantee, pensions are going up and we are helping small pension holders, a great many elderly people in Glasgow, Anniesland do not have any pension other than the state pension. Is it not time for the Government to look forward and put in place a 21st century plan for pensioners?

Dawn Primarolo: I assure my hon. Friend that the Government have exactly that plan. In addition to the state pension, the minimum income guarantee and the pension credit, the introduction of the stakeholder pension will ensure that future pensioners have an income that will protect them. The Government are also supporting pensioners in a number of other ways.
	It is a reproach to us all that there are pensioners living in poverty, inherited from the previous Government. It is our duty to put that right, and we will.

Manufacturing

John Barrett: If he will make a statement on the impact of the level of the pound on the manufacturing industry in Scotland.

Mark Field: What assessment he has made of the impact of UK interest rates over the past three years on the UK manufacturing sector.

Paul Boateng: The Government's latest assessment of developments in the manufacturing sector, based on all relevant factors, was published in November's pre-Budget report. The world economy slowed significantly last year, and this has clearly affected manufacturing in all parts of the United Kingdom and throughout the rest of the G7. Nevertheless, the UK is now in a better position than on previous occasions to cope with the turbulence in the world economy.

John Barrett: Yesterday, Scottish manufacturers reported that they had suffered the sharpest drop in exports for three years, with output and employment falling. What more can the Chancellor do to help Scottish manufacturers? How long will we have to wait for action, especially when further falls in output, productivity and employment are predicted?

Paul Boateng: Scotland, of course, cannot be insulated from the global downturn. Scottish manufacturers—and I was up in Scotland last Friday talking to one section of industry there—appreciate that not only have they been assisted by the sound public finances that now benefit the United Kingdom, the action that has been taken in terms of the Scottish Executive and the RDA but, importantly, the cuts in corporation tax and capital gains tax as well as research and development tax credits. All those measures contribute to a sound basis for manufacturing industry. That, rather than anything else, is likely to bring benefits in the medium term.

Mark Field: In view of the relatively rosy picture of the UK economy that the right hon. Gentleman has painted, will he go into some detail as to why he believes that the manufacturing sector, compared with others, is doing so badly?

Paul Boateng: I do not think that there is any question of painting a rosy picture or of any complacency. I refer the hon. Gentleman to the words yesterday of Mr. Martin Temple, the director general of the Engineering Employers Federation. He referred specifically to the incredibly powerful base of our manufacturing industry. What he also called for—something that the Government are providing—is joint action to encourage investment in research and development and in plant and to ensure that we have the skills available in our economy to promote manufacturing. All those things have been addressed by the Government. They are judged in the pre-Budget report to be important and they are being delivered.

Iain Luke: I congratulate my right hon. Friend on his recent visit to Scotland. Does he agree that the measures introduced in the pre-Budget report will be of specific relevance and importance to small businesses in Scotland, creating more productivity and competitiveness and increasing investment in enterprise, which will, in the long term, mean more jobs in the Scottish economy?

Paul Boateng: My hon. Friend takes a particular interest in small and medium-sized enterprises in Scotland. His analysis is absolutely right. It is significant that there has been a greater number of business start-ups in Scotland and that those businesses are more likely to succeed and endure as a result of this Government's policies and actions than ever was the case under the last Government.

Ian Davidson: Notwithstanding those points, does the Minister accept that the level of the pound is higher than is good for manufacturing industry and that, indeed, if we are ever to consider joining the euro, the present exchange rate is unsustainable and Britain would require a devaluation?

Paul Boateng: No, I do not agree with my hon. Friend, although I respect his views. The issue is not the strength of the pound, but the weakness of the euro. The Government's objective is to make sure that exchange rates remain stable and that we have a competitive pound in the medium term. The best contribution that the Government can make is to ensure that we maintain sound public finances and low inflation. This Government, unlike our predecessors, have delivered and will continue to deliver that.

Edward Davey: Does the Minister think it right for the Government unilaterally to seek to redefine national statistics classifications in order artificially to boost manufacturing output figures?

Paul Boateng: We have done no such thing. My right hon. Friend the Secretary of State for Trade and Industry has rightly pointed out the contribution that the services sector makes to industrial output. That is a perfectly proper reflection for her to make and one that the hon. Gentleman would do well to consider himself.

Meg Munn: My right hon. Friend will know that many of my constituents work in the steel industry. Does he agree that while a more favourable exchange rate would be important, equally important is the stability that the Government are delivering in the economy, which enables the steel industry to plan for the future?

Paul Boateng: My hon. Friend takes a particular interest in the steel industry for understandable reasons. I am grateful to her for the representations she makes on its behalf. Her analysis is absolutely right and the steel sector recognises that.

John Bercow: Given that manufacturing output has slumped by 5.5 per cent. in the past 12 months, that the Engineering Employers Federation, to which the Financial Secretary has just referred, says that the climate change levy punishes competitiveness and initiative by world-class manufacturing companies and that the Director General of the CBI says, "I have members in south Wales and the midlands who are laying off people in order to write cheques to the Government to pay the energy tax", is it not time that the Secretary of State for Trade and Industry and the Minister for Europe stopped blaming the exchange rate for the problems of British manufacturing industry and started to do something to arrest and reverse the tide of regulation that is drowning British businesses the length and breadth of the land?

Paul Boateng: The reality is far from that. Under this Government we have taken steps to make sure that manufacturing is put on a sound basis. Under this Government when we have taken steps to deliver on our Kyoto obligations we have involved industry, including the manufacturing sector, in order to help us design the effective tools to do that. That is why we invited Lord Marshall, whose leadership of the CBI was without parallel, to help us devise a climate change levy. That is what is delivering our Kyoto obligations and it is our sound management of the economy that is delivering to manufacturing industry. The sooner the hon. Gentleman learns that, the better. He should stop giving lectures to this House and continue to give lectures to his constituency party and his party because they have need of them.

Kevin Brennan: Is it not the case that the long-term interests of manufacturing industry in Scotland, Wales and rest of the United Kingdom are served by an economic policy that pursues low inflation, high growth and productivity, and that those things have been achieved by the present Government's economic policy? The only manufacturing that we get from Conservative Members is manufactured synthetic anger. Is it not the case that a policy of devaluation would fail because it is short-termist and short-sighted?

Paul Boateng: I could not have put it better myself.

Agriculture

Mark Simmonds: What discussions he has had with those in agriculture in advance of his forthcoming Budget.

Ruth Kelly: Treasury Ministers have regular contact with a wide range of interest groups and individuals, including those with an interest in agriculture.

Mark Simmonds: I thank the Minister for that answer. Considering that the Government have overseen a crisis in agriculture and in rural Britain since May 1997, crops grown for biodiesel would provide an excellent additional agricultural income and substantial environmental benefits. In the Chancellor's 2001 Budget, he announced that biofuels would qualify for a 20 per cent. tax rebate in fuel duty. The Minister should tell the House why the environmentally superior biofuels have not been given the same duty rebate as the gas fuels, currently 40p per litre, and that that anomaly will be addressed to the benefit of agricultural incomes throughout the United Kingdom.

Ruth Kelly: I am absolutely delighted that the hon. Gentleman recognises the sense of the Chancellor's proposal in the previous Budget to introduce a specific rebate for biodiesel in the next Budget. We have been listening to representations on that subject. I believe that there will be significant environmental improvements as a result of that rebate and I am sure that the Chancellor will listen very carefully to the representations that have been made today.

Huw Edwards: When my hon. Friend meets representatives of the farming industry before the Budget, will she discuss the increased resources that the Government have put into organic conversion, and the support that they have given to agri-environmental schemes such as Tir Gofal in Wales, which has been remarkably successful and was commended by those organic producers from my constituency whom I saw yesterday? Does she agree that the future for agriculture must be to support those family farmers who farm in an environmentally sustainable way, instead of giving disproportionate subsidies to large-scale producers in the east of England?

Ruth Kelly: I thank my hon. Friend for his comments. I certainly agree that the organic sector of our farming industry has an important role to play in the development of that industry. At the moment, I believe, about 2.5 per cent. of agricultural land is devoted to organic farming. There have been calls from the organic sector to increase that to about 30 per cent., which, at first glance, strikes me as rather ambitious.
	However, I completely agree with my hon. Friend that we need to take the development of the sector seriously. We need to continue our strategy of moving resources away from production support and into measures that will contribute to environmental development. In future, we want a market-oriented agricultural sector that provides for sustainable development and meets consumer demand.

Nicholas Winterton: I shall meet members of Macclesfield and district National Farmers Union on Saturday morning, and I should like to take them a message of hope from the Government. Does the Minister accept that if we are to maintain the countryside and to produce from land within the United Kingdom that food which we can economically and properly produce, the Budget must include some assistance, incentive and encouragement for our farmers? Will the Minister give me that assurance, to take to my farmers on Saturday morning?

Ruth Kelly: I certainly ask the hon. Gentleman to pass on my warmest regards to members of his local NFU when he meets them. He can of course tell them that it is the present Government who have commissioned the Food and Farming Commission, led by Don Curry, to look at the development of the sector to ensure that it can be developed in a sustainable way. The commission includes stakeholder representatives from all parts of the industry, and we look forward very much to considering their representations.
	I would also ask the hon. Gentleman to point out that it is the present Government who have led reform of the common agricultural policy within Europe. It is by forming alliances that the Government have been in the vanguard of reform and able to put forward the real changes that will matter in future to the agricultural sector.

Global Downturn

Fiona Mactaggart: What assessment he has made of the impact of the global downturn on the future performance of the UK economy.

Ruth Kelly: No country can fully insulate itself from developments in the world economy, but the UK is now in a better position than on previous occasions to cope with turbulence in it. As a result, leading external forecasters expect UK economic growth to be the fastest in the G7 this year.

Fiona Mactaggart: I thank the Economic Secretary for that reply, and I believe that the very challenging global circumstances—this is the first time for 30 years that every region of the world is facing a downturn—are only matched by the fact that this is the first time in the same period that Britain is the best-placed country in the world to face them. Does she agree that this is a very difficult time to consider increasing taxation to improve our public services because of that challenging global situation?

Ruth Kelly: I thank my hon. Friend for her comments and for pointing out that Britain is indeed in a very positive economic situation and better placed than any of the other 29 member countries in the Organisation for Economic Co-operation and Development to weather the very serious global economic downturn that has taken place since 11 September and as a result of the unwinding of the high-technology boom, as she rightly appreciates. Of course, we in this country must have a debate about the funding of our public services; it is important that people realise that, to correct 30 years of underinvestment, we need to put public services on a sustainable footing. What the Opposition consistently refuse to tell us—it became apparent just this week in the debate on public services—is whether they would match our funding plans, or whether they would slash public services.

Chris Grayling: May I ask the Economic Secretary to turn her attention to one of our key international trading partners and markets—Germany? What assessment has the Treasury made of the degree to which the problems in Germany are either caused by the current international situation or, as increasingly frequent independent analysis argues, are long-term, structural and caused by the fact that it joined the euro at the wrong rate? Is that latter analysis the accurate answer?

Ruth Kelly: The hon. Gentleman refers to the problems that the Germans are currently experiencing. In fact, growth in the euro area has turned out to be weaker than most independent forecasters were predicting only a few months ago. However, the European Council confirmed at the December ECOFIN meeting that the economic fundamentals are sound in the EU and that it expected a gradual recovery during 2002. What is important is that we have sound fundamentals and that we take the measures on economic reform to improve labour market flexibility and product-market competition and to ensure that it is as easy as possible for the EU to recover from the slowdown in global demand.

Peter Pike: Does my hon. Friend agree that, at this time of global downturn, it remains an absolute Government priority to allow industry to invest, especially in research and development and in high-value, high-skill products, so that we are best advantaged when the markets start to pick up?

Ruth Kelly: I completely agree with the points made by my hon. Friend, and it is incredibly important that we improve the manufacturing base and increase productivity in our manufacturing sector, so that we can take full advantage of the upturn in global demand when it comes. That is why the Government have introduced tax credits for small and medium sized enterprises and are consulting on how to extend those measures to larger firms. It is why we set up regional development agencies to drive forward economic growth in each of the regions. It is why we set up venture capital funds to ensure that small and medium sized enterprises have the access to capital that they so desperately need to grow, and it is also why we are working in partnership with the CBI and the TUC to look at ways of raising skills in the workplace, so that we have people who are fully trained and able to take advantage of those opportunities as they arise.

Agriculture

Chris Mullin: What plans he has to review the provision of roll–over relief on capital gains tax on the sale of agricultural land for development; and if he will make a statement.

Dawn Primarolo: We currently have no plans to review this relief, which supports trading including farming.

Chris Mullin: May I put it to my hon. Friend that the windfall profits arising from planning permission for agricultural land are already sufficiently enormous without it being necessary to award the landowner tax relief as well, especially since one of the effects is artificially to inflate the price of agricultural land? Whose idea was this? How can it possibly be in the public interest? Is it really not about time that a stop was put to it?

Dawn Primarolo: I have discussed this matter with my hon. Friend before and I know that he follows the subject very closely. The proceeds of the sale have to be reinvested in trade assets for the roll-over relief to be available in the first place. Roll-over reliefs are designed to allow traders to modernise and expand without an immediate charge to tax being made on the money of the business.
	I continue to have an open mind on the subject and I have considered closely the factors that interrelate with the sale of land, particularly farming land, for greenfield development. I am not convinced that roll-over relief is the problem, but I understand that the subject is dear to my hon. Friend's heart. I look forward to continuing to discuss the issue with him. If he has any further information, I shall be more than happy for him to send it to me and for me to reconsider it.

Alistair Burt: When the hon. Lady is examining submissions about tax relief and other initiatives for the Budget, will she take into consideration a recent European Commission survey that showed that, contrary to the beliefs of some Labour Members, Britain provided the lowest state aid to agriculture of any country in the European Community, whether that was measured as a percentage of GDP or in terms of the number of people employed?
	When the hon. Lady thinks about initiatives for the future, will she bear in mind the difficulties that agriculture has faced and will she therefore consider favourably tax changes that will help farmers? Will she particularly consider the initiatives suggested by people in that hard-pressed sector, because she is very unlikely to receive any suggestions from the Ministers with responsibility for agriculture?

Dawn Primarolo: I am sure that the hon. Gentleman is aware that a vast array of tax reliefs and supports are available for the farming community. He went on to make an important point about the diversification of rural communities and about considering ways in which we could assist that. I assure him that the issue is a high priority for the Government. I take his contribution to be a Budget representation and I will draw it to the attention of my right hon. Friend the Chancellor.

John Smith: May I welcome my hon. Friend's comments? The last thing in the world that we should be doing is putting up more barriers to farmers diversifying from agricultural overproduction and into new rural industries. I shall meet members of the Glamorgan branch of the NFU in Cowbridge tomorrow, and I would be delighted to be able to tell them that the Government plan to do even more to help them with diversification.

Dawn Primarolo: My hon. Friend can take my best wishes and those of my hon. Friend the Economic Secretary to the group that he will meet. I am sure that he will be able to reassure its members that the Government continue to take the views of the rural community very seriously. Not least, I point to the substantial help that Customs and Excise and the Inland Revenue were able to give members of the rural community during the difficult period that they all experienced during the foot and mouth crisis.
	I would like my hon. Friend to echo the comments that I have made to him and to the hon. Member for North-East Bedfordshire (Alistair Burt) about the fact that diversification of rural communities is of great importance to the Government. We will continue to take forward that programme as best we can and, as my right hon. Friend the Chancellor would expect me to say, as resources allow.

Services Sector

Mark Hoban: What recent assessment he has made of the state of the services sector.

Andrew Smith: The Government's latest assessment of the United Kingdom economy, including the service sector of course, is contained in annexe A of the pre-Budget report.

Mark Hoban: In the last quarter, we saw the end of employment growth in the service sector. It is now clear that it cannot absorb job losses elsewhere in the economy. When will the Government realise that their policies on red tape and taxes are damaging all sectors of the economy, not just manufacturing?

Andrew Smith: The capacity of Opposition Members to talk down important and successful sectors of the British economy never ceases to stagger me. The truth is that the service sector, notwithstanding the difficulties arising from foot and mouth disease and the events of 11 September, has continued to perform strongly, with outputs up 3.7 per cent. on the previous year and employment in September 229,000 higher than a year before. As the figures that came out yesterday show, the sector made a trade surplus contribution to the economy of more than £12 billion in the first 11 months of last year, although there are, of course, difficulties in some sectors.
	As for regulation, this Government introduced regulatory impact assessments, mandatory on audits and registration. We are raising the audit level for firms, simplifying the VAT procedures and doing everything that we can to cut down unnecessary regulation.

Vincent Cable: May I take the Chief Secretary back to the answer given a few minutes ago to my hon. Friend the Member for Kingston and Surbiton (Mr. Davey)? Is he aware that the Government proposal to redefine services to boost manufacturing output has been roundly condemned by, among others, the director of the highly respected National Institute of Economic and Social Research, because to do that unilaterally would be against Britain's international treaties and bring the statistical service into serious disrepute? Will he agree to approach the issue with a little more humility than the Financial Secretary and to take a fresh look at it?

Andrew Smith: The derivation and basis of official statistics is independent and the statistical service will form its own judgment. When my right hon. Friend answered that question he said that what is at issue is the very important contribution that services make to manufacturing success. Genuine issues, however, arise as a result of the fact that there is less vertical integration within industry than there was in the past.

Public Service Agreements

Nigel Beard: If he will make a statement on the progress in capital investment made by Government Departments toward their public service agreement targets.

Andrew Smith: The projections contained in the pre-Budget report show that we are on course to meet our ambitious targets on public sector net investment over the three years to 2003-04. This substantial increase in investment, matched with reform, will help Departments in achieving their public service agreement targets.

Nigel Beard: I congratulate my right hon. Friend on the progress that has been made. It stands in marked contrast to the days of successive Conservative Governments who borrowed for day-to-day spending and fecklessly neglected investment in schools, hospitals and railways. What are the possible impediments to maintaining the momentum of the capital investment programme? Such as they are, can they be overcome quickly? What steps are being taken to ensure that investment projects continue to be made on time and achieve their timetable as set out in public sector agreements, and that they are completed to best effect?

Andrew Smith: As for the record of the previous Administration, the last time they were in office public sector net investment fell by an average of 15 per cent. a year whereas in this spending period it is increasing by 40 per cent. a year. On bringing capital investment on-stream, my hon. Friend mentions impediments. It is the case, of course, that projects must be planned, implementation teams put in place, planning permission secured and so on.
	Some of the procurement practices, as well as the institutions, that we inherited from the Conservatives were greatly in need of reform. That is why we set up the Office of Government Commerce, which is revolutionising public sector procurement. It is also why our commitment to investment is matched with reform. We have devolved more power to the front line, given local managers a greater ability to manage and formed a close partnership with the private sector where appropriate so that we get the investment that we need. I assure my hon. Friend that that investment will be sustained.

Roger Casale: Was not the legacy of the Tory Government—[Interruption.]

Mr. Speaker: Order. The hon. Gentleman should not be worrying about the last Conservative Government. The Minister is responsible for his Department and his Government.

Roger Casale: rose—

Mr. Speaker: Order. Perhaps the hon. Gentleman should leave it.

Roger Casale: indicated assent

Manufacturing

Mark Prisk: When he last met the Governor of the Bank of England to discuss prospects for manufacturing industry.

Paul Boateng: The Chancellor and the Governor meet regularly to discuss a wide range of issues. As I made clear in my earlier answer to the hon. Members for Edinburgh, West (John Barrett) and for Cities of London and Westminster (Mr. Field), the Government have introduced a wide range of policies that benefit the manufacturing sector. The economic stability that our macro-economic frameworks are delivering offers the best foundation for manufacturing to thrive once global prospects strengthen.

Mark Prisk: I am grateful to the Minister for that reply. Since the latest discussions to which he referred, employment in manufacturing is now at its lowest level since records began. Manufacturers in my constituency and elsewhere tell me that they are struggling under a burden of regulation; small firms, in particular, are struggling with payroll regulations. Given that the Government have had the answer to payroll regulations since September, in the form of the Carter review, can the Minister tell the House why they are dithering over that report? How many more people have to lose their jobs in manufacturing before the Government act?

Paul Boateng: We are of course doing no such thing. The document to which the hon. Gentleman refers is a consultative document, aimed at finding out from business what it wants by way of Government action. We listen to business and we involve business. Interestingly enough, Mr. Martin Temple was good enough to acknowledge that fact yesterday in his observations about manufacturing. We are not prepared to accept any suggestion from Conservative Members that red tape is the minimum wage, that red tape is health and safety at work and that red tape is combating poverty through tax credits. We are proud to do all those things while removing burdensome regulation, much of which accumulated while the Conservatives were in charge of government.

Harry Barnes: Does the Governor of the Bank of England show any concern for matters beyond overall fiscal policy when he is involved in these discussions? Is he concerned about the fact that manufacturing in certain areas faces considerable problems, such as those in north Derbyshire, where several firms have closed? At the moment, Chesterfield Cylinders is downsizing because it faces problems, yet it has Ministry of Defence contracts and it is important that those are maintained. What ideas does the Governor offer the Government to try to solve those problems?

Paul Boateng: My hon. Friend understands that the Governor will speak for himself. He will also realise that the Governor has the benefit of the Bank's regional network, and that all relevant factors, including those that he mentioned, are taken into account by the Monetary Policy Committee.

Mark Francois: Does the Minister remember Labour's promise in opposition to implement an industrial policy to enable our manufacturing industries to grow again? Given that manufacturing output fell by over 5 per cent. in the last year alone, when will Labour deliver on its promises to our manufacturers?

Paul Boateng: Not only do I remember that promise, but I am part of a team that is delivering it. The hon. Gentleman needs to understand that in 2000 manufacturing output grew at its fastest rate since 1994. That is a tribute to this Government and an indictment of his.

Working Families Tax Credit

Siobhain McDonagh: What his estimate is of the impact of working families tax credit in reducing child poverty in (a) Mitcham and Morden and (b) the UK.

Dawn Primarolo: The introduction of the working families tax credit, along with other changes to the personal tax and benefit system since 1997, means that there are 1.2 million fewer children in relative poverty in the United Kingdom than there would otherwise have been. In Mitcham and Morden, 1,600 families are currently benefiting from the working families tax credit.

Siobhain McDonagh: I thank the Minister for her answer. Will she look at the categories of child care that are eligible for the child care tax credit? As she knows, a number of us are concerned that although registered child minder costs are covered, those of resident Nursery Nurses Education Board nannies are not, even though the training for that child care qualification is significant. That restricts the ability to work of people who work shifts, particularly NHS nurses.

Dawn Primarolo: I can tell my right hon. Friend—my hon. Friend; I nearly promoted her—that the question of care for children in their homes, whether they are disabled or their parents work unsociable hours, is of great importance. I am currently discussing with Ministers in the Department for Education and Skills how to ensure that regulation is in place so that the child care element of the working families tax credit could be paid. My hon. Friend will understand that it is not for the Treasury to regulate the standard and quality of care; that is the responsibility of the Department for Education and Skills. I hope that we can resolve that problem soon.

Business of the House

Eric Forth: Will the Leader of the House please let us have the business for next week?

Robin Cook: The business for next week will be as follows:
	Monday 28 January—Remaining stages of the Civil Defence (Grant) Bill.
	The Chairman of Ways and Means has named opposed private business, namely the City of London (Ward Elections) Bill, for consideration at 7 o'clock.
	Tuesday 29 January—Opposition Day [9th Allotted Day]. There will be a debate entitled "The Government's Mismanagement of the Post Office"—[Interruption.] I have grown accustomed to a cheer at this point in the proceedings, but it is really not necessary.
	Wednesday 30 January—Motion on the Police Grant Report (England and Wales) 2002–3.
	Motion on Local Government (Finance) Report 2002–3.
	Thursday 31 January—Remaining stages of the Travel Concessions (Eligibility) Bill [Lords].
	Motion on the Environmental Impact Assessment (Uncultivated Land and Semi-Natural Areas) (England) Regulations 2001.
	Motion to approve the Administration Committee Report on the reopening of the Line of Route.
	Friday 1 February—Debate on implementing the Learning Disability White Paper on a motion for the Adjournment of the House.
	The provisional business for the following week will be:
	Monday 4 February—Opposition Day [10th Allotted Day]. There will be a debate on an Opposition motion. Subject to be announced.
	Tuesday 5 February—Remaining stages of the Education Bill (1st Day).
	Wednesday 6 February—Remaining stages of the Education Bill (2nd Day).
	Thursday 7 February—Remaining stages of the Tax Credits Bill.
	Friday 8 February—Debate on Government measures to regenerate disadvantaged areas on a motion for the Adjournment of the House.
	The House may wish to know that subject to the progress of business the House will rise for the Easter recess at the end of business on Tuesday 26 March, returning on Tuesday 9 April.
	In last week's business questions, the hon. Member for North Cornwall (Mr. Tyler) drew attention to the confusion over the precise date of Whit this year; some Members anticipated that, as normal, it would fall in the last week of May. I reflected on the matter and I can inform the House that, subject to the progress of business, the House will rise for the Whitsun recess at the end of business on Friday 24 May, returning on Tuesday 11 June.

Eric Forth: I thank the Leader of the House for announcing not just the business for next week but the recess dates. Is he in a position yet to tell us when Budget day will be this year? We are now perilously close to February and we usually expect to have notice of the Budget at this stage.
	May I ask the Leader of the House about proposals floating about in the Modernisation Committee on the House sitting in September? I have been approached, as, no doubt, has the right hon. Gentleman himself, by many Members asking for clarification of the matter. It would be helpful if he could give some indication at this stage of whether the House will be, or may be, sitting in September this year. We are anxious that the House should sit in September, as you know, Mr. Speaker, so that we can harry the Government and hold them to account even more frequently, and would be grateful if the Leader of the House could give us some indication. If for any reason we were unable to sit, I am sure that he would be able to give us a very good reason why not.
	The Leader of the House announced a debate next week on mismanagement of the Post Office. It is to be held in our time, on an Opposition day, but it gives rise in my mind to the question why, given the uncertainty surrounding the Post Office, the National Audit Office report and the unease among employees—and, indeed, among all of us as users of the Post Office's excellent services—we have had to force the Government to come to the House and give an explanation by using an Opposition day. They have used their time to tell us about volcanoes in Africa and all sorts of other things recently. Why must we drag them here to tell us about what is going on in the Post Office? I am sad to say that that is an indication of the rather odd priorities that they seem to have these days. I can only hope that we will get some far more convincing answers in our debate next Tuesday than we have received hitherto.

Robin Cook: First, in response to the question about the Budget date, I say to the right hon. Gentleman and his colleagues that we will ensure that they are advised of the date as soon as it is confirmed. At the present time, I have no reason to suppose that it will be significantly different from those in previous years: either in mid to late March or very early in April.
	I welcome what the right hon. Gentleman said about the importance of returning in September. We on the Labour Benches look forward to returning in September as well, although possibly for different reasons from his. We want to do so in order to put before the nation the way in which we are carrying through our programme to improve public services—[Interruption.] I am very glad that I can take the rest as read. None the less, we will want to talk about the record investment in education and health that we are carrying through. I regret to say that there are several good reasons why it will not be possible to introduce that innovation this year. A number of hon. Members have made their arrangements in good faith—I am impressed by the number of Members who are thinking so far ahead—and Mr. Speaker has arrangements to visit Canada and also to represent Britain on 11 September in New York. I am also advised that there will be roadworks outside the Palace. [Laughter.] While I believe that it would be entirely right for us to meet in September, people have taken it in good faith that we will not be sitting and I want the innovation to be introduced in an orderly, satisfactory and successful way. Therefore, I think that it is right to give adequate notice, which means that I would hope that we would introduce this change for next year.
	On the issue of Consignia—

Eric Forth: The Post Office.

Robin Cook: It is technically and legally constituted as Consignia, but I have no problem with the right hon. Gentleman using phrases that he understands from previous years. With regard to Consignia, the House introduced a Bill only two years ago on this Government's initiative—it was broadly supported by the Opposition during its passage—that created commercial freedom for Consignia. It is absolutely right that we should let the management of Consignia, in consultation with its work force, take forward its plans for the company without constant micromanagement by Government, this House or any external political influence.
	I am rather surprised that the right hon. Gentleman should take exception to our coming to the House with a statement on our response to the emergency situation caused by a volcano erupting in the Great Lakes area. I welcome the fact that a statement was made to the House on the matter. Many people outside in Britain would expect their Government to respond sympathetically and humanely to that emergency.

Jean Corston: Will my right hon. Friend find time for an early debate on the issues arising from the use of personal cases to illustrate what is happening in the national health service? Is he aware that the shadow Health Minister, the hon. Member for Woodspring (Dr. Fox), said in his maiden speech that
	"dredging up personal cases of misery to try to find the one case that has gone badly in the national health service and overlooking all the reforms and successes that we have had"
	was the
	"lowest form of political debate"?
	He went on to say:
	"To try to say that every case that has gone wrong is typical is loathsome."—[Official Report, 12 May 1992; Vol. 207, c. 541.]
	Does my right hon. Friend agree that such a debate would give the hon. Gentleman the opportunity to explain why he now thinks that it is acceptable for the Leader of the Opposition not only to raise such a case, but to do so without the common courtesy that we would all observe of contacting the hospital first?

Robin Cook: It is regrettable that the good sense of the hon. Member for Woodspring (Dr. Fox) has declined since his maiden speech. Every hon. Member would echo some of the sentiments that he expressed in it. From time to time, I have raised personal cases in the House; they probably live in the memory of some hon. Members who were present at the time. However, my hon. Friends and I did that with the full support of the relevant staff, who were appalled at the poor resources with which they had to work. I cannot recall an occasion when I or any Labour Member took up a personal case to attack NHS staff. Yesterday, the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) attacked not simply the health service but those public servants who work in it. That will not be forgotten.

Paul Tyler: I thank the Leader of the House for clearing up the confusion about the Whit recess. It will enable my Liberal Democrat colleagues to stop juggling their constituency commitments during those two weeks. It may also enable them to fix their matrimonial arrangements.
	When can we expect a Government response to yesterday's statement from the Select Committee on the Environment, Food and Rural Affairs that the confusion about what is being investigated in relation to foot and mouth disease cannot continue? Several inquiries are in progress, but they are leaving unresolved and unexamined important matters such as the effects of the disease on rural Britain and the way in which the Government tackled it. A Select Committee, which has a Labour majority, has called for an overarching, comprehensive inquiry. I hope that the Government will take that more seriously than previous requests from us and hon. Members from other parties.
	In the past, Mr. Speaker, you have deprecated Ministers' habits of making statements to the media before they make them to the House. It appears that, in an interview on "Today" this morning, the Foreign Secretary signalled a change of policy on the internees at the Cuban base. He suggested that he expects any British citizen there to be brought back here to face justice. Is that now the Government's policy? Is it also their policy that other nationals should return to their home states to face justice rather than facing the perhaps peculiar justice of the United States? What is the Government's position on the use of the death penalty? The Minister of State has signalled a different conclusion on that. Are we trying to insist that our American allies respect the Geneva convention?

Robin Cook: The hon. Gentleman began on a happy note, and I welcome his welcome for the Whit recess. If that enables the leader of the Liberal Democrats to achieve his marriage in good order with a good honeymoon, I am all the happier that I have been able to give the dates to hon. Members. For once, perhaps all hon. Members can agree to ask the hon. Gentleman to convey our congratulations to his leader.

Eric Forth: Can we have a vote?

Robin Cook: No. I take it as a foregone conclusion.
	The report of the Environment, Food and Rural Affairs Committee was published only yesterday, and it is premature to expect a Government response. We have established three separate inquiries; one may report soon and the others will do so in the longer term. That panoply of inquiries gives us a good basis for examining what happened and, more important, looking ahead to what we shall do with the countryside and the rural economy. At an appropriate time, the House will have an opportunity to examine that. Environment, Food and Rural Affairs questions will take place next week.
	As I have said previously about the detainees at Guantanamo Bay, whether the Geneva convention applies is not the most important consideration. Even if it does not apply, international humanitarian law does. I believe that it is accepted here and in the United States that it is important to ensure that our humanitarian standards apply to the detainees, and that we thus show our superiority and that of our system to the ruthless terrorist values that they pursued.
	On the issue of the death penalty, the Foreign Office and the Government have repeatedly expressed the view to all countries that they should abolish the death penalty, as we have done. We shall continue to campaign for that. Should there be a case for charging the three British citizens, we would expect them to face those charges in Britain if they have broken British law. That is not a new position; it is the position that we have always held.

Jeremy Corbyn: Will the Leader of the House reflect further on the request made by my hon. Friend the Member for Bristol, East (Jean Corston) for a debate on the national health service, to enable Members of the House to express their full support for all staff, black and white, at the Whittington hospital in my constituency for the very caring way in which they look after all their patients, and for their dedication to the principles of a national health service that is free at the point of use? If allegations are made concerning inadequate care or support for any patient, it is incumbent on us all to listen to both the family and the hospital concerned first, and at all times to try to prevent a public debate about the care of an individual patient. Surely all of us deserve the right to privacy in matters of medical care.

Robin Cook: I entirely agree with my hon. Friend about the importance of supporting the principles of the NHS and the staff who work hard to try to deliver on those principles. It is important that the national health service should, as it goes about its business, be a model employer that is blind to any racial discrimination or division, and that it should provide for fair opportunity and an excellent quality of care. I would remind the House that the hospital in my hon. Friend's constituency was only recently praised for the quality of its care for patients.

Andrew Mitchell: I agree with the hon. Member for Islington, North (Jeremy Corbyn) about the importance of having regular debates on the state of the health service. Has the Leader of the House had a chance to see the very worrying reports in the press in the last week that, despite increased expenditure on the health service, the amount of NHS activity in the last quarter has declined? Does he understand why our constituents are enormously concerned about the state of the public services, and the health service in particular, under this Government's stewardship? Will he, therefore, accept the need for regular debates, with the Prime Minister in attendance, so that we can monitor the extent to which the Prime Minister is delivering on his solemn pledge to the British people at the last election that the NHS would improve under his stewardship?

Robin Cook: I refer the hon. Gentleman to the report of the NHS modernisation board, which, only the other week, confirmed that we now have more nurses, more doctors and more beds in the NHS than ever before. Indeed, last year was the first year for 30 years in which the number of beds in the health service actually increased. As to activity rates, 500,000 more operations are now performed every year than during the Conservative years, which is a 10 per cent. increase. I welcome that increase in activity, and we will continue to put in the investment to ensure that it continues. I would ask the hon. Gentleman, and any other Opposition Member inclined to raise the issue of the NHS, whether they will give a commitment to match our level of investment. If they are committed, as their leader has said, to introducing tax cuts, will they please explain how they will do so without bringing in public spending cuts?

Alice Mahon: Given the statement by the Secretary of State for Health last week that we should privatise the management of the national health service, and the statement by Lord Haskins this morning that corporate business should run the NHS, may we have an urgent debate on the failed privatisations—such as the privatisation of the railways, and of care for the elderly—brought in by the last Conservative Government, so that we can expose once and for all this neanderthal thinking, and the myth that the private sector can run our public services better than the public sector? All the evidence points to the fact that it simply cannot do so.

Robin Cook: We have debated the failed privatisation of Railtrack on a number of occasions recently. The net effect of the many attempts by the Opposition to attack us on that matter has been to produce a poll for ITN which showed that more people blame the Conservative Government than the Labour Government for the difficulties on the railways. I welcome the fact that we have now taken Railtrack out of an environment in which it had to struggle between its priority to the travelling public and its priority to its private shareholders.
	On the question of the management of the NHS, I say to my hon. Friend that my right hon. Friend the Secretary of State has proposed that we should devolve management within the NHS and provide more discretion for local hospitals to take the initiative, run their affairs and respond to local circumstances. We must strike the right balance between a national health service with national standards and values and local initiative at management level.

George Young: Has it not been the House's practice regularly to debate in Government time key issues such as taxation, public expenditure and the performance of the economy? When in this Parliament have the Government provided time for such a debate, and when does the right hon. Gentleman plan to hold one?

Robin Cook: The whole House understands that the Chancellor is unable to play a full part in our proceedings at present, but, as the right hon. Member for Bromley and Chislehurst (Mr. Forth) said, there will be a Budget debate shortly and plenty of opportunities to examine the economy in that context.

Mark Lazarowicz: Did my right hon. Friend see this week's Sunday Herald report of the allegation made by a former corporate lawyer with Arthur Andersen in the UK that the firm's auditors in this country were bullied by Enron in Europe into signing off audited accounts that inflated earnings? Will my right hon. Friend ask his colleagues to investigate that claim and arrange a debate, perhaps in Westminster Hall, on the relationship between external auditors and the businesses they audit?

Robin Cook: If the US law enforcement agencies carrying out the investigation approach the UK authorities, they will receive full co-operation from all our people if we can assist with the investigation into the affairs of Enron. My hon. Friend refers to an issue that is a concern to a number of Members. The importance of safeguarding the independence of auditors and finding ways in which to ensure that the commercial world and our constituents are confident that audits are independent, not the result of pressure or bullying, has been raised in a number of areas and there is no excuse under any circumstances for bullying people into signing fraudulent accounts.

Charles Hendry: Will the Leader of the House arrange an early debate on the growing problem of antisocial behaviour, such as vandalism, graffiti and loutish behaviour, which affect all our constituencies and make the lives of so many people, especially the elderly, a misery? Often, they live in constant fear. He is aware that in many of our constituencies the police simply do not have the resources to tackle those issues because they are so overstretched elsewhere. May we have an urgent debate in Government time so that the Home Secretary can tell the House what he plans to do about those matters?

Robin Cook: First, on a point of fact, police numbers are increasing and there is a record increase in the number of those being trained for the police force. Quite properly, my right hon. Friend the Home Secretary is considering ways to ensure that uniformed police maximise the time spent on patrol and in the community and minimise the time that they have to spend on paperwork at the station.
	Every Member of the House has constituency experience of the grave impact on the quality of life that can arise from antisocial behaviour. We have already introduced orders to try to deal with that and we are considering ways in which they might be improved by further legislation.

Brian Iddon: This month, the worst outbreak of salmonella poisoning in Bolton in more than 50 years occurred in my constituency. Dozens of people have suffered and seven were admitted to hospital, including 80-year-old Ted Ivers, who was in intensive care, his wife Edith and their son-in-law. Will my right hon. Friend join me in sending best wishes to all those who have suffered? A few days ago, the Government published "Getting Ahead of the Curve", which is a strategy compiled by the chief medical officer for combating infectious disease. Will the Government give time to debate that important document?

Robin Cook: I have no hesitation in joining my hon. Friend in wishing a speedy recovery to those who have—

Eric Forth: An individual case.

Robin Cook: All of them. I presume that my hon. Friend has contacted those affected and has their authority to speak. I send all those affected our best wishes for a speedy recovery. I am sure that the report makes a number of interesting points and recommendations and I have full faith in the Government's plans for coping with infectious diseases. This may be an excellent case for a debate in Westminster Hall on which he might wish to reflect.

John Taylor: Is the Minister aware that bed blocking at Birmingham Heartlands hospital by clients of Birmingham social services department is delaying operations for Solihull patients who also use that hospital? May we have a debate on bed blocking?

Robin Cook: In fairness to the House, this issue has been ventilated on several occasions and we have had a number of opportunities to examine policy in the NHS. I agree with the hon. Gentleman that those exchanges have shown that both sides of the House recognise that this is a serious issue. That is precisely why the Government have made significant sums of new money available to local authorities, to assist them to move patients into more appropriate care.
	This is a problem not just for patients with an acute need for an acute bed, but for the people in those beds who have nowhere more suitable to move to. It is important for both groups that we find a way forward. We are seeking to do that through better management and by providing more money.

Andrew MacKinlay: Will my right hon. Friend make a definitive statement on the Government's attitude to the opposed private business on Monday, the City of London (Ward Elections) Bill?

Robin Cook: It would be improper of me, on behalf of the Government, to express a view on that private Bill one way or the other. I am aware that my hon. Friend and some of his colleagues have expressed vigorous views on the Bill. As the Leader of the House, I am content for it to be a matter for the House to decide, and I am sure that my hon. Friend and his colleagues will continue to express their vigorous views.

Pete Wishart: May I draw the right hon. Gentleman's attention to the vexed question of the proposed Bill to ban tobacco advertising? He will be aware of the growing frustration in Scotland about the Government's inaction on this issue. The Health and Community Care Committee of the Scottish Parliament is considering asking the right hon. Gentleman to give evidence to it and to explain the lack of Government action. What is the status of the proposed Bill, and will the right hon. Gentleman attend that Committee if asked?

Robin Cook: I read with great interest the press release from the hon. Gentleman's colleague in the Scottish Parliament. Should any such decision be approved by that Committee as a whole, I will reflect on how I can be helpful without straying across the clear boundaries that we set up under the principle of devolution. I am fully seized of the importance of the tobacco Bill, and should an opportunity arise to address that measure during this Session, I will take it.

John Smith: May I draw the attention of my right hon. Friend and the House to a candlelight vigil that will take place outside St. Stephen's entrance this evening in memory of the 44 people who have died from deep vein thrombosis related to air travel? I welcome the Government's statement in a written answer this week that they are unequivocally committed to an investigation into the incidence, extent and causation of deep vein thrombosis related to air travel.
	It is more than four months since the Civil Aviation Authority placed before Ministers research that it had carried out on aircraft seat spacing, but the House has not had a response. It is important that we get a response, because one of the recommendations of that independent research was that seat spacing in United Kingdom aircraft should be increased immediately.

Robin Cook: I commend the diligence with which my hon. Friend raises this important matter in the House. I was saying only this morning, when I heard about the vigil, that I was sure that he would raise the matter during business questions. We are seized of the importance of this issue, which is why on 30 November we issued new guidance to passengers and the public on how to minimise the risk of deep vein thrombosis. We remain willing to consider other ways in which we can be of assistance. I will draw my hon. Friend's remarks on seat spacing to the attention of my right hon. Friend the Secretary of State for Health—with perhaps the rider that, as a frequent air traveller, I would welcome more seat space.

Andrew MacKay: The Leader of the House will recall that yesterday there was a significant debate on Zimbabwe in Westminster Hall, and Opposition Members also questioned the Prime Minister and expressed grave concern about the deteriorating situation in that country. Can the right hon. Gentleman give us an absolute assurance that in the coming weeks, in the run-up to the March presidential elections and probably thereafter, when the Mugabe regime will almost certainly behave despicably, Ministers will regularly be available to update the House and to take questions from us?

Robin Cook: I have no doubt that the House will wish to be kept informed on the issue, and I fully appreciate and share the deep concern in the House about the entirely improper way in which the Mugabe regime is seeking to rig the presidential election. There will be two important meetings next year, a European Union meeting to discuss the EU's approach to Zimbabwe and a meeting of Commonwealth Ministers to discuss the country's place in the Commonwealth. Whether a statement is appropriate is a matter that we will keep under advisement, but I assure Members that we will keep them fully informed of our views and of the action we are taking.

Anthony D Wright: Is my right hon. Friend aware of the chief medical officer's report on myalgic encephalomyelitis—ME—which was published last week, and is he aware of the effects that it will have for ME sufferers? May we have an early debate on the report on the Floor of the House, and on all the problems that sufferers throughout the country have experienced for far too long? The report in itself—produced by a working group—gives them hope and encouragement, but I think it should mark the beginning rather than the end of a campaign.

Robin Cook: I am sure that all ME sufferers will be pleased that my hon. Friend has drawn attention to their case, and to the need for more recognition of, and a better response to, their requirements. I have no plans to arrange a debate on the report, but I am sure that my hon. Friend and others will look for ways of ventilating its conclusions.

Julian Lewis: I was going to ask for a debate on early-day motion 700, which states:
	[That this House is dismayed by the report in the Evening Standard of 21st January that the Secretary of State for Transport, Local Government and the Regions has blocked the appointment of the career civil servant lan Jones as head of media in his Department; notes that his preferred choice, Ms Ann Wallis, is an outsider who is a friend and former colleague of Jo Moore; urges him to abandon this further attempt at politicisation; and fears that if successful, this will bury the impartiality of the Civil Service.]
	In other words, it concerns the Transport Secretary's attempt to impose a crony of Jo Moore as head of media in his Department.
	As that question has been blocked, may I instead ask why the right hon. Gentleman thinks that the roadworks scheduled for September will hinder us from sitting then? We have been informed by the office of the Serjeant at Arms that both the Black Rod's Garden entrance and the Carriage Gates will be open, and that access will be unimpeded. If the right hon. Gentleman thinks that such minor roadworks will be an obstacle, what does he think will happen in 2003 and 2004, when massive roadworks are planned for Parliament square as a result of one of the crazy schemes of his former parliamentary colleague, Ken Livingstone?

Robin Cook: The post of head of media has been filled according to civil service rules and with a civil service commissioner involved in the appointment.
	The main reason for our proposal not to proceed with the change in sittings this year is that it will be convenient for Members who, in good faith, have already made arrangements for September. That includes Mr. Speaker, who has undertaken to fulfil a commitment in Canada. We want him to fulfil that commitment, and also to represent Britain in New York on 11 September.
	I personally am strongly committed to ensuring that we make changes in the long recess. After all, I proposed them. I think that they will be convenient to the House, and that the public will be pleased to see us sitting in September. From next year, we shall do so.

David Winnick: Many of us have campaigned for a shorter recess over the years, and I am glad that at long last the House is to sit in September, even if it does not do so this year. Oddly enough, such a proposal—despite the delay by a year—has been criticised by Opposition Members, and was opposed by past Governments, who always resisted any proposal for the House to return in less than 10 or 12 weeks. The 1992 summer recess lasted at least three months.

Robin Cook: I thank my hon. Friend for his observation. I welcome the Opposition's impatience for us to act on my modernisation proposal, and I hope that it will extend to the other recommendations.

Patrick McLoughlin: As the Leader of the House will know, the Department for Environment, Food and Rural Affairs has existed for more than seven months. It has probably the worst record in Government for replying to Members' letters, and responding to the concerns of our constituents. Will the right hon. Gentleman ensure that the Secretary of State makes a statement next week about how she will improve the Department's responses?

Robin Cook: The Secretary of State will be answering questions next week. I am sure that the hon. Gentleman and others will seek to raise that point, but as I have said before, the reason for the delay in replies from the Department for Environment, Food and Rural Affairs is that the volume of its correspondence has gone up threefold, which is why the Secretary of State has written to every Member setting out the steps that she is taking to increase the staff in the correspondence unit and to improve the turnover to MPs. The delay is a result of the increased work load, not of any reorganisation of the Department.

Alan Simpson: The Leader of the House has rightly acquired a reputation as someone who is willing to think radically about the reform of the Houses of Parliament in order to make sure that we are relevant to the 21st century, rather than redundant. It is in that context that I ask him to consider an urgent debate on the future of the NHS. The reason is that at the very least there are some discrepancies that need explaining between repeated assurances from Ministers that the NHS will never be transferred out of public hands and into private hands, and this morning's statement by Labour peer Lord Haskins suggesting that the NHS's future is to be found in transferring it lock, stock and barrel into the hands of a private corporation.
	Given the number of hon. Members on both sides of the House who have asked questions about the NHS today, will the Leader of the House at least reflect on the urgent need for such a debate, before another of the luminaries in the other House, who increasingly represent the voices of the new corporate aristocracy, suggests that democracy itself would be best served if Parliament were also transferred to a private corporation?

Robin Cook: I am pleased to say that, as Leader of the House, I have no plans to transfer Parliament to a private corporation.
	Lord Haskins, who is not a Minister, was speaking at the launch of the report by the King's Fund, which is not a subsidiary of the Government. It has made a number of recommendations about the decentralisation of NHS management, with which we are comfortable, but it is an independent body and it must speak for itself. I cannot speak for it, but I assure my hon. Friend and the House that we will not privatise the NHS, which will remain a public service, accountable through Ministers to the House and based on national values that reflect its importance as a service to meet need, not a service to chase money.

Colin Breed: Can the Leader of the House arrange for a statement to be made at the earliest opportunity on the Trident refit complex at Devonport? He may be aware that, with only a few weeks to go, it is reported that the complex is not complete. More important, it has yet to receive its nuclear installations certificate. That is causing my constituents, and, I think, others in the Plymouth area, some concern.

Robin Cook: The issue is of concern to the hon. Gentleman's constituents but it is of wider concern because it raises larger issues. In fairness to my right hon. Friend the Secretary of State for Defence, he has always been vigilant in making statements to the House on procurement or the management of his Department. I welcome the fact that only this week there was a statement from his Department on the treatment of Army pensions. I shall draw the hon. Gentleman's remarks to the attention of the Secretary of State, who will no doubt wish to write to him direct.

Mark Tami: May I draw my right hon. Friend's attention to early-day motion 714?
	[That this House expresses its deep concern at the conduct of KPMG as receiver for UPF-Thomson who are effectively holding Land Rover to ransom and placing over l0,000 manufacturing jobs at risk; believes that this will endanger well established business arrangements that could lead to increased sourcing of components overseas; and calls upon the Government to review all it's department contracts with KPMG in light of their actions.]
	KPMG's demand for over £40 million for resupplying Land Rover with chassis is nothing short of blackmail and threatens the whole manufacturer/supplier relationship in Britain. It will put tens of thousands of jobs at risk, many of them in Wales. Will he agree to an early debate on that crucial subject, and will the Government look at what contracts they have with KPMG?

Robin Cook: I hesitate to be drawn into the commercial character of the argument to which my hon. Friend refers. I welcome the fact that the business statement has given him an opportunity to ventilate the matter in the House, and I have no doubt that he will look for other ways to do so, but it is unlikely that the Government will wish to intervene in what is a commercial dispute.

Michael Jack: When last week I asked the Leader of the House to be kind enough to hold an urgent debate on Sir Donald Curry's report on the future of food and farming, to be published next week, he urged me to curb my enthusiasm until the other two reports on the foot and mouth disease outbreak were published. Now that the Leader of the House will have had a chance to read the report by the Select Committee on the Environment, Food and Rural Affairs, he will realise that those two reports will not see the light of day at least for six months and most likely for 12 months. That is too long a gap for the House not to debate in Government time those important rural matters. I wonder whether he would be kind enough to re-examine the situation.

Robin Cook: We will always keep the issue under review. If it appears appropriate to hold a debate, I am sure that the Government will wish to respond to any feeling in the House that is consistent with it being the right time for that debate to take place. However, I remind Opposition Members that they were the ones who pressed for a full public inquiry, which would have taken years rather than months to produce a result.

Stephen McCabe: Does my right hon. Friend share my sense of disgust at the case of the 39-year-old Somerset father of two who apparently committed no offence in enticing two 11-year-old girls to strip naked for his sexual gratification, although he would have committed an offence if he had photographed his child victims? Surely we need an early opportunity to discuss that obvious loophole in the laws designed to protect children from paedophiles?

Robin Cook: I share my hon. Friend's puzzlement about the case. Many hon. Members will find it difficult to comprehend that no offence existed under which a charge could be brought in the case. As I told the House last week, we are carrying out a review of sexual offences, with a view to producing legislation at some point in the future. We want to make sure that the range of offences is modernised so that it meets the current realities and has no substantial loopholes. I am sure that those carrying out the review will reflect on the case to which my hon. Friend refers.

Anne McIntosh: Will the Leader of the House arrange for the Secretary of State for Transport, Local Government and the Regions to set out at the Dispatch Box the parliamentary timetable for legislation to impose a levy to recoup the costs of the air travel transport fund? The fund, which is operated by the Civil Aviation Authority, was set up 20 years ago to reimburse operators and bring back stranded tourists if a major travel company went broke. However, it has run out of money, and the CAA has emphasised the seriousness of the consequences should a major travel operator, package holiday company or charter airline go bust as a result of the very serious security threats in the wake of 11 September. We need appropriate legislation in place before the summer.

Robin Cook: I remind the hon. Lady that my right hon. Friend the Secretary of State for Transport, Local Government and the Regions will be answering questions next Tuesday. This is clearly a matter on which he can be interrogated by the House. The hon. Lady raises a serious issue, and I shall certainly draw her remarks to the attention of the Department for Transport, Local Government and the Regions so that appropriate steps might be considered. However, given where we are in the parliamentary year and the pressure of legislation, I cannot necessarily commit the Government to further legislation this Session.

Ashok Kumar: Will the Leader of the House make available some time before Budget day for a debate on the climate change levy? The levy has been in place for nearly a year, and my right hon. Friend the Chancellor of the Exchequer will make his own statement about it on Budget day. However, it is a very important issue, affecting the steel and chemical industries in the north-east and Teesside, and the people who work in them. Before my right hon. Friend the Chancellor makes his decision, we should have a debate on the Floor of the House.

Robin Cook: I am sure that my right hon. Friend the Chancellor and his ministerial team are well aware of the views that have been expressed on the matter. However, a balance has to be struck. We have to make sure that we do not place our industries at a competitive disadvantage vis-à-vis the industries of other countries in the world, but we also have to make sure that Britain plays its full part in stabilising the climate. Although it will remain important, the health of our industry will be relatively less significant than the very sharp changes in lifestyle and health, among other problems, that will follow if we do not manage to get a grip on the problem and secure a stable climate.

Henry Bellingham: Will the Leader of the House say whether it will be possible for the Deputy Prime Minister to come to the House for a debate in the near future? He has become almost invisible recently. I have not seen him in the House or on television, and as far as I am aware he has not punched a member of the public recently. Is the right hon. Gentleman still a Minister? If so, will the Government try to make better use of him?

Robin Cook: I would urge the hon. Gentleman to attend Prime Minister's Questions. Had he done so yesterday, he would have seen my right hon. Friend the Deputy Prime Minister in his place. I can tell the House that I saw my right hon. Friend only an hour ago, and he was taking part vigorously in our debates on public policy.

Harry Barnes: Is my right hon. Friend aware of yesterday's excellent debate in Westminster Hall on the coal industry? It lasted an hour and a half and the Members present were all of the opinion that we need a full debate in Government time on the Floor of the House because of the many problems surrounding the coal industry. The debate dealt essentially with the future of the coal industry, but there are other matters to do with the impact of the industry on areas where pits have been closed.
	I have raised matters in previous weeks that require a debate on the Floor of the House. To that list of items I have added vibration white finger, for which the Benefits Agency has a very peculiar test. People who get compensation for vibration white finger under the compensation scheme miss out on benefit provision. Along with the list of items that I have been pressing in recent weeks and those dealt with in Westminster Hall, that calls for a full debate on the Floor of the House.

Robin Cook: I congratulate my hon. Friend, who is one of our most regular attendees at business questions. No one raises constituency issues more assiduously than he does. He frequently reminds us of the many problems facing those who formerly worked in the coal industry and the communities that sustained it.
	I will reflect on what my hon. Friend says. He argues his case with his customary logic and a well-researched brief. I have said to the House before that it may be appropriate at the right moment to have a debate on the present energy review. Perhaps my hon. Friend could raise some of these questions then.

Evan Harris: The right hon. Gentleman will be aware that the Government's generally admirable Adoption and Children Bill will shortly come back to the House for its Report stage. He will also be aware of a cross-party amendment, to which I have added my name, which calls for unmarried couples to be considered for adoption. That would help deal with the concern about the tens of thousands of children requiring placement who are in care homes. Will the right hon. Gentleman confirm that that would be an admirable change for the Government to make? In view of the confusion and press comment that there has been this week, will he confirm that the Government, along with Liberal Democrat Members, will support such an important measure, or at least allow Labour Members a free vote on it?

Robin Cook: First, I should like to pocket the hon. Gentleman's praise for the admirable Bill. I am glad that it has his support. On the amendment that he proposes to make to the Bill, that is a matter to be argued on Report. I will make sure that the Report stage is held in good time for the hon. Gentleman and others to debate these matters.
	The law on this was first changed in 1976, when some moves were made to allow greater liberality. Whether there is a case for a further move is for the hon. Gentleman to argue. However, the Government's position—and, to be fair, that of the previous Government—is that the interests and welfare of the child must always come first.

John Cryer: My right hon. Friend will be aware of the appalling proposal to privatise the RAF's fire and rescue services. It is causing a great deal of concern inside the RAF and outside, particularly among trade unions such as the Transport and General Workers Union and the Fire Brigades Union. I have had representations from constituents, as my constituency has a long-standing relationship with the RAF. RAF Hornchurch was part of the ring of steel in 1940 in the fight against fascism. Could we at least have a statement or a debate on this?

Robin Cook: My hon. Friend is correct, in that there is a project in the Ministry of Defence to assess the most viable and cost-effective solution for the provision of airfield support within the Ministry. If any proposal is made to meet those needs with a privatised service, it will be tested against a public sector comparator to make sure that it represents value for money. It must also be tested against other policy requirements, including, of course, the security of the armed forces and Ministry of Defence airfields. Should a decision be reached, I am sure that it will be announced to the House and that my hon. Friend will have an opportunity to offer his views both in advance and afterwards.

Graham Brady: Will the Leader of the House make time available for an urgent statement on the policing of Greater Manchester, particularly in the light of the Commonwealth games to be held this summer? Greater Manchester police are facing a shortfall of £22 million in their budget, exacerbated by the fact that the Government have not yet agreed to fund the £7.5 million cost of policing the games. The chief constable of Greater Manchester police has said:
	"We are in a desperate situation and if we don't get funding for the games, it will have a massive impact on policing in Greater Manchester."
	It is vital to all the people of Greater Manchester that we have a proper debate so that there is an opportunity for a statement and we can extract that promise from the Government.

Robin Cook: I remind the hon. Gentleman that Manchester sought to hold the Commonwealth games and, indeed, fought hard for that. I congratulate it on its success. Naturally, there are consequences of Manchester's success in securing the Commonwealth games. I am not sure that the hon. Gentleman gives a full, rounded picture of the position on Manchester police funding. Recently they received a special grant which has made theirs the first police force in the country to have digital radio for their services.

Graham Brady: A cut.

Robin Cook: Hardly. That puts them ahead of all the other police forces in the country and it will continue to ensure that they provide an excellent service.

Kevin Brennan: Will my right hon. Friend make time to introduce legislation on the continuing scandal of short measures of pints of beer in our pubs? Is he aware of the recent research conducted by the Campaign for Real Ale which shows that nine out of 10 pints being served in England and Wales are short measures, and that things are getting worse? Over the past three years the number of short measures being served has increased by 10 per cent. [Interruption.] I am glad to hear the inheritors of the men who watered down the workers' beer supporting this. I invite my right hon. Friend when he visits Cardiff for Labour's spring conference to partake of a pint of Brain's, the finest beer in Britain. If he finds time to introduce legislation, he will be the toast of Cardiff and, indeed, of Britain—because everyone who pays for a full pint, should get one.

Robin Cook: My hon. Friend raises a matter of great concern to the public and to many Members of this House. Any short measure is a clear public scandal and I assure my hon. Friend that we will seek to bear down as hard as we can. I would be in trouble with many hon. Members if I tried to express a preference for one particular regional beer over another.

Paul Tyler: indicated assent

Robin Cook: I see that I carry the hon. Member for North Cornwall (Mr. Tyler) in my caution on this point. I will be coming to Cardiff soon and I shall sample Brain's beer and consider whether it possibly reaches equivalence with the excellent McEwans beer that is brewed in my native country.

Andrew Turner: Many of us will remember with nostalgia and affection the silver jubilee celebrations in the days of our youth. Will the Government make a statement on how the new generation can similarly enjoy the golden jubilee celebrations of Her Majesty the Queen's reign this year, by lifting the absurd threat of administration charges for traffic orders, risk assessments and health and safety inspections, which have been quoted as £800 for a street party; and similarly, by ending the demands for absurd levels of third party insurance? Would it not be nice to read a headline that says, "Cook calls for common sense. Bring out the bunting!"?

Robin Cook: I regret that I cannot write these headlines, but the hon. Gentleman makes an attractive suggestion which I enjoin on all newspaper editors. We hope that the golden jubilee will be a success. The hon. Gentleman will be aware that my colleagues at the Department for Culture, Media and Sport are working hard to do all we can to support it. There is no requirement for third party insurance for street parties. We hope that local authorities will apply common sense with regard to the other charges that he mentioned and will want to work with local people to make a success of local celebrations. That is why we welcome the decision of some local authorities to reduce or remove these charges.

NHS Cuts

David Lidington: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 24, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
	the decision by the south east regional executive of the NHS to instruct every health authority and NHS trust in that region to implement cuts in planned expenditure and services by the end of the current financial year.
	The matter is specific and important. The cuts have been ordered by the regional chief executive to eliminate a projected deficit of £60 million in the NHS in the south-east of England. The cuts will apply to each NHS institution in Kent, Sussex, Surrey, Hampshire, the Isle of Wight, Berkshire, Buckinghamshire, Oxfordshire and Northamptonshire. The chief executive's letter is explicit in saying that savings will be required not only from those authorities and trusts that are at the moment projected to be in deficit at the end of the financial year, but from those that are set to break even or to achieve a surplus.
	Ministers have made no public announcement so far, but it is now clear that the matter is urgent. A leaked letter to health authorities and trusts from the chief executive of the NHS south-east region, dated 14 January, demands immediate action to implement the savings required:
	"Proposals need to be capable of being actioned to deliver savings before 31st March. I do not want reasons as to why savings cannot be achieved but proposals on what could be actioned. I recognise that this will mean reductions in areas that do not contribute to national imperatives . . . You should revisit all revenue and capital spending plans for the remainder of the year".
	We need a debate because local people have a right to know where the axe will fall. I hope that there will be an opportunity for Ministers to be questioned and to tell the truth to the House.

Mr. Speaker: I have listened carefully to what the hon. Gentleman has said and I have to give my decision without stating any reasons. I am afraid that I do not consider that the matter that he has raised appropriate for discussion under Standing Order No. 24, and I cannot therefore submit the application to the House.

Points of Order

Jeremy Corbyn: On a point of order, Mr. Speaker. You will recall that at 11.30 this morning the Chairman of Ways and Means moved that the City of London (Ward Elections) Bill be set down for debate, and in the business statement the Leader of the House said that it would be debated at 7 o'clock on Monday evening. Would you consider some means by which the time for tabling amendments can be extended? Under the procedure, amendments to be considered for selection on Monday would have to be on the Order Paper by tomorrow morning or this evening, which means that there are only seven and a half hours in which to table such amendments. Do you not think that that is a wholly inadequate time for what is, after all, a deeply controversial and, many of us believe, wholly unnecessary piece of legislation?

Mr. Speaker: The hon. Gentleman might realise that I cannot make an exception for one Bill. It would be very difficult for me to do so.

Julian Brazier: On a point of order, Mr. Speaker. I of course fully accept the ruling that you gave my hon. Friend the Member for Aylesbury (Mr. Lidington), but I seek your advice as to how to raise the ghastly case of my constituent, 83-year-old Arnhem veteran Bill Holman, whose surgeon telephoned me a few minutes ago to say that Mr. Holman spent 36 hours waiting among 40 other people on trolleys in casualty, with really severe stomach pains. I could not get into business questions because I was telephoning Mr. Holman. He told me that at one point he was considering suicide. The place was so overcrowded and the staff were so over-stressed that he had his coat instead of a pillow under his head at one stage. How much longer will this go on in our hospitals in Kent?

Mr. Speaker: The hon. Gentleman has already used his ingenuity to help his Arnhem veteran. The hon. Gentleman knows his way around the Order Paper and knows how to get in touch with Ministers.

Evan Harris: On a point of order, Mr. Speaker. Following exchanges in the House yesterday at Prime Minister's questions, Members of Parliament will be aware that they are not, unlike medical staff, under a duty of confidentiality. Does that not nevertheless place a responsibility on MPs, given parliamentary privilege, to recognise, first, that best practice involves seeking the permission of a patient, where a patient is competent to give consent, before raising their case publicly; and, secondly, that medical staff are not in a position to respond to allegations made against them by patients' relatives, other third parties, the media or MPs without risking employment sanctions or being reported to their professional regulatory body?
	Would you consider, therefore, Mr. Speaker, some guidelines to Members of Parliament, similar to our self-denying ordinance on the question of sub judice, that will show best practice and recognise patients' right to confidentiality and the difficulty that medical staff have in responding to allegations made, because of the risk that they will be reported to their professional bodies for breach of confidentiality? I should be grateful if you would consider issuing such guidance.

Mr. Speaker: The hon. Gentleman gave me notice of this point of order, and I understand that, in doing so, he said that he would write to me. The best course of action is for him to write to me, so that I can consider this matter.

Public Accounts

Edward Leigh: I beg to move,
	That this House takes note of the 38th to 47th Reports of the Committee of Public Accounts of Session 1999–2000, of the 1st to 16th Reports of Session 2000–01, and of the Treasury Minutes on these Reports (Cm 5021, 5071, 5078, 5127, 5201 and 5261).
	I feel very privileged to be Chairman of the Public Accounts Committee. Dating from Gladstone, the office has been held by some very distinguished Members, some of whom went on to even better things. Harold Wilson, for example, held the post before becoming Prime Minister, and my immediate predecessor, my right hon. Friend the Member for Haltemprice and Howden (David Davis), held the post before becoming chairman of the Conservative party.
	I pay tribute to my immediate predecessor. He asked me to pass on his good wishes to the Committee, but, ever scrupulous about our impartiality, he thought it better for the chairman of the Conservative party not to attend today.
	My right hon. Friend often said that his challenge as Chairman of the Committee was to make audit exciting. Did he succeed? He certainly raised the Committee's profile during his four years as its Chairman, and it was—almost to coin a phrase—a profile with a purpose. That higher profile caused the Committee's work to be taken more seriously and resulted in it having a greater impact. His drive and intellect were matched by an appreciation of the Committee's impartiality, and he was quick to condemn failure in our public services, regardless of political sensitivities. Even in his first two years as Chairman he was prepared to put his name to reports that were very critical of the previous Conservative Government. He was utterly impartial. He had a very clear agenda as the Committee's Chairman and understood that its work could make a real difference to the quality of people's lives across the spectrum of Government policy.
	My right hon. Friend took a particular interest in the Committee's work on hospital-acquired infection, which affects thousands of people each year at a staggering cost that is measurable financially and in lives lost. The Committee's work raised the profile of that issue and led to the first concerted programme of action to make hospitals cleaner and safer places.
	My right hon. Friend became increasingly frustrated by the fact that the Committee would see the same errors repeated time and again, so he commissioned three reports—on privatisations, the private finance initiative and information technology projects—that identified those recurring themes and made practical suggestions for improvement. The IT report that he commissioned has had a particular impact. It drew on 25 reports, spanning 10 years, and contained a wealth of experience gained from studying IT projects. Its objective was to look forward and to identify lessons from the past that would be relevant to future IT projects. The Government's response to it was positive, and I hope that its impact will continue to be felt for many years to come.
	My right hon. Friend was a very keen advocate of the need for Parliament to have the power and the information to hold the Government properly to account. He intervened on numerous occasions to ensure that the powers of the Comptroller and Auditor General were strengthened. In particular, he played a leading part in the debate on the Government Resources and Accounts Act 2000, as well as in the ensuing review, led by Lord Sharman, of audit and central Government accountability arrangements. That review recommended a significant extension of the CAG's powers, on which I hope the Treasury will respond in the very near future.
	My right hon. Friend inherited a Committee steeped in a long tradition, spanning 140 years of thorough and worthwhile work. During his chairmanship, he raised the profile of the Committee's work and focused its energies more rigorously on issues of importance to people's day-to-day lives. I am sure that the House will join me in commending his contribution to the Committee's work, and we wish him well in his new role. [Hon. Members: "Hear, hear."]
	Other significant changes have been made. In the past year, the Committee has lost a number of valuable members. I pay tribute to my hon. Friend the Member for West Chelmsford (Mr. Burns) and to the hon. Members for Tynemouth (Mr. Campbell), for Edmonton (Mr. Love) and for Eastwood (Mr. Murphy). It gives me great pleasure, however, to welcome to the Committee the hon. Members for Tamworth (Mr. Jenkins) and for Hemsworth (Jon Trickett), my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) and—two new additions to the House—my hon. Friends the Members for South Norfolk (Mr. Bacon) and for Tatton (Mr. Osborne).
	Membership of the Committee is not an easy ride. The subject matter varies widely across the range of government and it is often very technical and difficult to master. Members have to work hard in preparing to dissect two entirely different topics every week that Parliament sits. No other Select Committee has anything like our work load. Members of the Committee work with energy, commitment and enthusiasm and I am indebted to them for their support. I pay tribute to them, and I am sure that some of them will wish to catch your eye later in the debate, Mr. Deputy Speaker.
	I also pay tribute to the former Committee Clerk, Mr. Ken Brown OBE. He retired in December after serving the Committee for six gruelling years and after 40 years' service to the House. Ken will be known to many Members, and he will be remembered for his good humour, sound advice and his ability to get things done. He served three successive Chairmen of the Committee and we all came to rely on his sure-footed approach. He understood perfectly the dynamics of the Committee and was able to find appropriate ways to push at the boundaries of the conventions within which we operate, of which there are many, but he was careful never to breach them. I thank the other Committee staff for the sterling service that they provide and welcome Mr. Nick Wright, our new Clerk, to his work.
	I look forward to working closely with the new Financial Secretary, the right hon. Member for Brent, South (Mr. Boateng). We have always had a very good working relationship in the past and he is, uniquely, a member of the Committee. I understand that the convention is that he makes a formal appearance, and we look forward to seeing him at some time in the near future.
	The Committee's work would be pointless if it did not have an impact. Much of its impact is the result of the expertise of the Comptroller and Auditor General and his staff at the National Audit Office. The Committee is so strong because it is serviced by the NAO, which employs 700 people. Between us, we have generated savings of £1.4 billion over the past three years. We have produced 30 reports over the past year alone on matters as diverse as the National Blood Service and the refinancing of the Fazakerley private finance initiative prison contract. We have ranged right across government.
	Those considering possible reforms of the Select Committee system should look at the Public Accounts Committee—at the way in which it is so expertly serviced, at the care with which the reports on which we base our deliberations are prepared and at the impact that they have every week of the year.
	We cover many issues, but when we first considered taking evidence about obesity—just one of the subjects that caused contention—some members questioned whether the issue was within the locus of a financial scrutiny Committee. It was suggested that, surely, people had a right to choose to be fat. One of my Committee, the hon. Member for City of Durham (Mr. Steinberg)—who is in his place—said that
	"the vast majority of people eat too much, they indulge, they do not do any exercise and basically it is their own fault."
	That is typical of his valuable contributions to our Committee.
	Our evidence session revealed that obesity is very much a public policy issue; the public purse, in the form of NHS care and benefit payments, certainly picks up much of the cost. Obesity contributes to 30,000 premature deaths each year and costs the economy £2.5 billion a year.
	Before our deliberations, the NAO helpfully provided a body mass index dial, which the hon. Member for City of Durham viewed with incredulity. How could it be that he—a finely honed athlete—should be uncomfortably close to the obese category? Indeed, so strongly did he feel that he stood up before witnesses—permanent secretaries from five Departments—and gave them full sight of his muscular physique, toned by many years actively gracing these Benches. "Could you describe me as obese?", he challenged. The assembled mandarins flinched or blanched and, with an aplomb of which Sir Humphrey would have been proud, they ducked the question. The issues that surfaced, however, were real, and the costs, in terms of cash and human lives, enormous. I mention the subject because it was the first time that the PAC considered a subject that involved so many Departments, and it was a good and useful exercise.
	Our work encompasses all central Government spending. It covers a staggering breadth of activity, with a level of complexity to match. Hard-pressed public servants in our hospitals, schools and armed forces, to name just a few, work to deliver ever-more complicated services against a backdrop of rising public expectation. All their work is carried out in the glare of publicity in a media often interested only in failure. It is true that some public servants might see my Committee in the same light—interested only in failure. That is not true, and to do so would be to misunderstand our purpose and approach. I want dwell for a moment or two on what I believe to be the central purpose of the Committee. At the start of this Parliament, it is right that we should ask ourselves why we are here and what we are going do with the powers given to us for the next four or five years.
	In brief, the members of my Committee—I think that I speak for them when I say this—represent the interests of the taxpayer. That is why we are here as Members of Parliament, and our priorities reflect those of our constituents. We want to be sure that taxpayers' money is spent properly on what Parliament has approved, and we want to be sure that the services delivered to the public are of good quality and achieve the outcome intended. By bringing our constituency and personal perspectives to the issues that we consider, we speak for the layman—indeed, we are laymen—but we do so with much more authority because our deliberations are informed by the detailed work and expert analysis provided by the NAO. We, with our experience, can speak for our constituents.
	It is well known that we do not interrogate Ministers. We normally interrogate permanent secretaries and are unique in that respect. As a Committee and the mouthpiece of Parliament, we have a unique relationship with the British civil service. It is renowned for its honesty and integrity. I believe, however, that my Committee has a role to play in ensuring that it also develops a reputation for successfully delivering public services. It is no longer good enough to have a worldwide reputation for honesty and integrity.
	The British civil service has to deliver successful public services. We have an important part to play in understanding why projects and programmes have not delivered what was expected, but we seek also to identify the elements of success when we find them and to suggest solutions. We do not want to be negative all the time. We do not want to be just an undertaker. We do, however, want to be a practical force for good, trying to suggest how things can be done better.
	We do not get involved in policy, which is our key to success. It is why we are a united Committee and why we hunt as a pack. No one can put a piece of paper between any member of the Committee because we focus our attention on the civil service, not on policy, and on trying to get things done.
	Our task is to ensure that the learning points from our work are not lost, but crystallised and acted on. The fact that more than 90 per cent. of our recommendations are accepted by the Government clearly shows that our concerns are well founded and our suggestions well grounded. If anyone says that Parliament means nothing, that Back Benchers have no power and that Select Committees mean nothing, here is one Select Committee—meeting twice a week, producing up to 50 reports a year—that has 90 per cent. of its recommendations accepted by the Government. That is not a bad track record.
	We are also sometimes criticised for focusing on relatively small bodies that spend relatively little. My response to such criticism is that if we constantly target very large spending Departments, there is a danger that those in the smaller bodies will feel free from the discipline that parliamentary scrutiny provides. In our experience, the smaller spending areas are most vulnerable to fraud, mismanagement and impropriety because often there are fewer controls. We believe that each public pound is as important as the next, and we take an interest in them all.
	In summarising our work for the past year there are four themes of particular interest: the quality of financial management, improving public service, innovation and risk, and accountability. First, monitoring the quality of financial management is central to our role and it is a fundamental part of our work. The past year has seen a major change in the way in which the Government account for public expenditure. After 140 years, the wholly cash-based system by which Parliament approved Government expenditure has been replaced with one in which Parliament votes on expenditure in terms of resources, reflecting when liabilities are entered into, rather than when cash is paid out. For Departments, the challenge of changing systems has been immense, and I pay tribute to Sir Andrew Likierman and his team in the Treasury and their personal contributions in driving through this very difficult work. It has often been a uphill struggle.
	What next? As a result of the shift to resource accounting, we have a wealth of information that was not available to us before. We need now to play our part, and we owe it to the taxpayer to devote more of our time to understanding and interpreting the information that is now available. That in itself is a massive task for Parliament and a huge challenge for us if we are to hold the Government to account day by day. We intend to do our best.
	Reliable and timely accounts are essential if we are to grasp the potential of resource accounts. We can make progress only if those accounts are delivered well and on time and they are accurate. Last November, we reviewed the progress that Departments have made as they move from the old system to the new. I accept that the transition to the new commercial-style accounts, which are complicated, has caused many Departments headaches and difficulties, but it has been largely successful, with many Departments making substantial efforts to improve the quality of their resource accounts.
	We were disappointed, however, that far too many Departments had qualified opinions on their accounts. That position must improve. Departments must also address the widespread and persistent lack of timeliness in delivering their accounts to the Comptroller and Auditor General. Delays in submitting accounts suggest a more disturbing malaise, and we must ask whether senior staff in Departments, including permanent secretaries, are sufficiently engaged in the process, although I am sure they understand it. It is essential that senior staff in public bodies take seriously their personal responsibility for the public funds with which they are entrusted.
	As I said, the propriety of the British civil service is not in doubt. My concerns, and the three examples that I shall briefly give, are about the need for sound systems of control and early warning signs before things go badly wrong. The first example in which my Committee recently played an part, and acted particularly strongly, concerns the Public Trust Office, which existed to protect the financial interests of the mentally incapacitated and was therefore responsible for one of the most vulnerable sections of the community. The Committee first reported on the very poor service provided in 1994, and we were dismayed to find in 1999 that the improvements we had been promised had still not materialised—indeed, performance had declined.
	A further dimension to the PTO's problems emerged when we considered the management of unclaimed balances in court funds, weaknesses in its financial reporting and bonus arrangements for the agency's former chief executive. The Lord Chancellor's Department had responsibility for the PTO, but its approach was woefully hands off. It had ignored the warning signs so clearly heralded in our earlier report. For example, despite the PTO's worsening performance, the Department allowed its chief executive to continue to receive her full performance bonus. In the course of our subsequent work, the Department acknowledged that its oversight should have been a lot better; supervision should have been more rigorous and greater leadership should have been shown to help the agency think more imaginatively about its operations. In accepting our recommendations, the Lord Chancellor's Department took the radical step of closing the PTO and creating a new system to protect the interests of those vulnerable people. Clearly, we have to keep a close eye on that in future, but it is an example of the PAC's work and the way in which we have acted.
	Failure to act on warning signs was a factor in our report on the corruption case involving Focus housing association. Two former Focus employees and a property dealer were convicted after the two employees took bribes from the dealer in connection with a purchase by Focus of 47 houses between 1991 and 1995, many at inflated prices. The case illustrated the failure of the Housing Corporation, which oversees housing associations, to act with sufficient urgency and improve their regulation of them. The Housing Corporation acknowledged to the Committee that there were inadequacies in its regulation of housing associations in the early 1990s, particularly in assessing their internal controls; those weaknesses may have made it easier for the corruption to occur. While the corporation began to improve its regulation, following a PAC report in 1994, it took until 1998, long after the discovery of corruption at Focus, to complete those improvements, which was far too slow.
	Suspected impropriety at whatever level in government should be investigated properly and thoroughly to protect public funds. The corruption was discovered as a result of an investigation prompted by allegations received by Focus, but only after it and the Housing Corporation had received between them no fewer than six earlier warnings of possible impropriety. The case reinforces the need for allegations of impropriety to be swiftly and fully investigated.
	It is outrageous that the Comptroller and Auditor General did not have the right of automatic access to the housing association, but had to negotiate with it for six months before gaining access to the information that he needed to bring the matter to our attention. Parliament has had a central role in such matters throughout history, but in that clear case of impropriety it took six months for the CAG to gain access, which is not good enough. We shall soon have the Government's response to Lord Sharman; I hope that they accept his recommendation that the CAG should have automatic access so that people working in that sector are aware that they are answerable to Parliament for the way in which they use public money.
	Further education is another sector with which there are problems. It is a large sector and receives about £3 billion a year. Most colleges manage their financial affairs successfully, but our ninth report found that 72 FE colleges—some 17 per cent. of the total—were in financial difficulty. Financial problems on that scale give rise to serious questions about the funding, organisation, governance and management of the sector, and unnecessarily divert management from its primary role of delivering quality and successful education. We found that the Further Education Funding Council focused too much on trying to help colleges once they had got into difficulty, rather than spotting the warning signs and taking early preventive action.
	We urge the Learning and Skills Council, which now has responsibility for the sector, to take a more pro-active approach than its predecessor. It must identify problems earlier and take preventive measures sooner if the sector is to meet the targets for widening participation and improving quality. That illustrates a wider problem that has vexed other committees. There is a danger that bodies with responsibility for oversight of a sector confuse their support and regulatory functions. Instead of policing a sector, they are captured by it. We recently looked at the Charity Commissioners; they are a notable example in which there is confusion about the role that they play.
	I shall say a bit about better public service delivery, which is now at the heart of the political agenda. That reflects the genuine concern and belief across the political divide that there is enormous scope for improvement. The issue must, therefore, be central to the Committee's remit.
	I want to focus on one element of public service delivery that has become something of a recurring theme for the Committee—equity. I hope that we can emphasise equity in our work in the next few years. It is the principle that access to and quality of the services that a citizen receives should not vary according to one's postcode.
	For example, in the Committee's 43rd report of 1999-2000, we considered hip replacements. Total hip replacement is a highly effective procedure that reduces pain and increases mobility in almost all cases. In England, the NHS performs more than 30,000 replacements each year, at a cost of about £140 million. Most patients who have a hip operation receive an excellent service, but we expressed concern about variations in access to treatment and the quality of care that people were receiving. Believe it or not, patients can wait for an operation for anything between two and 16 months, although the average is eight months. Clearly, waiting 16 months for a hip operation is completely unacceptable. Integrated pathways for hip patients reduce their length of stay in hospital and improve outcomes, but what do phrases such as "integrated care pathways", which are used by the bureaucracy, mean? This particular term means people talking to each other in the NHS. Less than a third of trusts use pathways for all hip replacements. We hear much about joined-up government, but our role in the Committee in this matter and indeed all others is to ensure that we have joined-up management as well as joined-up government. There is no point in all the Ministers in the world ensuring that we have joined-up government—if they can do such a thing—if we still do not have joined-up management.
	Sticking with health, I mentioned the terrible blight that hospital-acquired infection represents for patients. It kills about 5,000 people a year and costs the NHS about £1 billion a year. I am pleased that, since the Committee worked on it, the issue's profile has been raised considerably, but I still remember being staggered by the differences in how trusts were handling the problem. Again, there were enormous differences throughout the country. Infection control nurses have been shown to be vital in reducing the level of hospital-acquired infections. At the time of the National Audit Office investigation, the number of beds that one of these crucial nurses had to cover varied from about 150 in some trusts, which is fine, to an impossible-to-manage 1,800 in the very worst cases. Such a difference may mean that a patient's chances of picking up an infection and dying—that is what we are talking about—depends on which hospital they are lucky or unlucky enough to end up in.
	More recently, and again on health, the Committee took evidence on another example of poor-quality service following our recent investigation of NHS waiting lists. Drawing on the CAG's report, we noted that there were sharp disparities in patient waiting times across the country. For example, 37 per cent. of people in west Sussex wait more than six months for admission, but in Dorset, less than 1 per cent. wait six months. That is a huge disparity on a central issue of political concern. It is also a concern for our constituents and it simply cannot be right. Indeed, these wide variations can occur in adjacent areas. I know that that is the case. They occur between Lincolnshire and Humberside in my constituency.
	Variations in patient care are not confined to waiting lists and hip replacements. The Committee found the same problem in the previous Parliament when we examined cataract surgery and cervical screening. Although politicians spend a lot of time arguing party political points about health, there is a huge amount of detailed management work to be done that makes a real difference to people's lives, irrespective of views on the future of the NHS. We intend to pursue those problems. Almost 6 million people a year are admitted to hospital in England for at least one night, so good information systems that provide real information on current and planned uses of resources are essential.
	We highlighted the Royal Shrewsbury hospitals NHS trust because it has a good system, which has dramatically reduced the number of operations cancelled for non-medical reasons. Sadly, that is rare.
	Too many trusts continue to have inadequate information systems. In the 21st century, bed managers in 90 per cent. of hospitals can find out whether beds are vacant only by physically inspecting them or telephoning wards. It is disappointing that the NHS executive has not done more to build on the success of systems such as those developed in Shrewsbury. Although the new NHS information technology strategy aims to tackle that, many trusts will continue to operate without the information that they need until new systems are available nationwide. That is a simple matter, but it could make so much difference to people's lives.
	I have already considered some of the disparities in waiting times. Why should patients, who may have waited many months for an operation, face the disappointment of a last-minute cancellation simply because the trust in their area—they have no choice about where they are being sent—does not adopt the good practice that already exists in other parts of the country?
	I am pleased to say that our criticism has not fallen on deaf ears. When questioned, the Department of Health acknowledged that such variations need to be tackled, and is taking action. Distributing resources more fairly and targeting them to remove variations is an important first step. Setting national standards through the National Institute for Clinical Excellence and a national service framework, and testing compliance with the Commission for Health Improvement, are also crucial. We shall keep an eye on all those matters. We were told that differences in management processes were a factor in the variations. It is therefore imperative that best practice is quickly rolled out to ensure consistency of service.
	The autumn of 2000 provided a grim reminder of the misery that serious flooding can cause.

Geraint Davies: Does the hon. Gentleman agree that the Committee's work is valuable because it does not simply isolate opportunities for improvements but provokes them? He mentioned hip replacements, consistency, hospital-acquired infection and the regulation of waiting lists. There have been significant responses to our work, such as improvements in the NHS from which people have benefited.

Edward Leigh: I am happy to accept that. The value of our Committee is that we do not try make party political points and we can therefore focus attention on issues, sometimes through pretty hard questioning and embarrassing the civil service. Most of the time, the Government respond. I pay tribute to those who respond and take our Committee's work seriously.
	I was about to consider flooding, a serious matter that came to the fore in the autumn of 2000 when approximately 10,000 properties were hit by floods. Up to 5 million people and 2 million homes, businesses and other buildings in England are at risk from flooding. Yet the protection that homes and families might receive and whether flood warnings are issued depends on where one lives. That is remarkable. I did not know that before I began to study the Committee's work. When we took evidence on that serious issue, we learned that fewer than half those at risk of flooding live in areas covered by the Environment Agency's flood warning systems.
	The Environment Agency needs to examine why different regions use different warning systems. It must satisfy itself that the methods used are the most effective in the circumstances and that they do not simply reflect local attitudes or the willingness to make funds available for warning systems. We were appalled to discover the poor condition of flood defence assets.
	Nearly half the flood defence structures and a third of the barriers were categorised as fair, poor or very poor. We found that 165 km of flood defences are derelict. When someone is unfortunate enough to experience flooding, they can sometimes only use sandbags. However, in 2000, not everyone who wanted them could get them. Members of the public whose properties are at risk should not have to live with uncertainty about whether they will receive warnings or whether sandbags will be available.
	Of course we welcome the extra investment for flood protection, but it will take years to take effect. A country-wide strategy is now required to deliver appropriate flood defence measures to the public, where similar flood risks exist regardless of where they live. This reflects our belief in equity. The current organisational responsibility and funding arrangements for inland flood defences are extremely complex. They involve a significant number of bodies—as I know, representing a low-lying area. They are confusing to the public, and possibly a hindrance to a consistent level of service.
	To take a completely different example—one can range over the whole of government; I am just going to pick up one or two examples—there is also disparity in the treatment of benefit claimants across the country. For example, when we considered those who undergo medical assessments to determine their eligibility for disability and incapacity benefit, we heard another tale of large regional variations. The money involved is significant: more than £19 billion is paid each year in such benefits. Timely assessment is vital to avoid unnecessary delays for the prospective claimant, which could cause them worry or hardship. It is also important to protect the public purse by ensuring that people are paid only what they are entitled to.
	The Committee heard that the time taken to process cases due for review varied across the country from 90 days—quite good—to 170 days. For example, those living in the west of Scotland have to wait nearly twice as long to hear the decision on their case as those living in the west country. The simple question that we want to ask is why they should have to do so. The Department for Work and Pensions needs to step up its efforts to ensure that claims are processed quickly, so that claimants across the whole country get their benefit without delay, and people who are ineligible are speedily removed from the system.
	Equal access to public services and consistency in the quality of those services are essential. People across the land pay the same levels of tax, and we believe—this is a central part of our work—that they rightly expect to, and should, receive the same levels of service. My Committee will, I hope, continue to highlight cases of inconsistency. We will continue to define the elements of success where services work well, and provide a pointer so that the quality of services across the country can be brought up to the level of the best. There is no doubt that so much in our public services is of the best, but so much lags far behind. If our Committee can focus a spotlight on the worst services, and drag those responsible—including civil servants and officials—before us, we will have done our work.
	If someone in the private sector fails, they may lose their job. In the public sector, perhaps the worst that can happen is that they come before the hon. Member for City of Durham, or my hon. Friend the Member for Bognor Regis and Littlehampton, but we will give them a hard time. We will not flinch from doing so because it is their job to provide the best public services throughout the nation.

Gerry Steinberg: Does the hon. Gentleman agree that the NHS seems to be the only organisation in the country in which someone who fails can get a £95,000 bonus?

Edward Leigh: The Committee has studied that case recently, and will produce a report to which the Government will have to reply. I cannot go into too much detail until that has happened, but we were horrified by the case, and held a very hard-hitting hearing on it. It is simply not acceptable that people who fail in the public sector can be shuffled off—even into another job, in the NHS—so that those who are trying to investigate them cannot do that. We have to sort that out. We must ensure that people do not have a job for life just because they are in the public sector. Those who use the NHS have paid for their health care, and they deserve the best. If people are fiddling the waiting lists, they will have to go, and they will have to pay the price.
	I turn to the theme of innovation and risk management. Innovation is essential if public services are to improve, and it entails risk. We are not against risks. They are not something to be avoided, but they must be carefully identified, evaluated and managed. That is so easy to say. One might think that those are just words, but how often have those words been taken into account over the past decades?
	Numerous reports by the Committee have focused on the issue of risk. Two, in particular, demonstrate the flexibility of our approach to the issue. In December, we reported on the debacle—there is no other word to describe it—surrounding the benefit payment card, which was a vast and complex project that failed at vast expense. Estimates vary, but the figure involved could be up to £1 billion. Some clear learning points surfaced in our inquiry.
	The other report was published in November. It considered risk management across government and identified important gaps in risk management systems. If risks are not managed, enormous sums may be paid out. The benefit payment card is a classic example, although we acknowledge that the project was innovative and that it had special features that added to the risk, notably its status as a pioneering private finance initiative project and the need to join up the systems of two purchasers with different business objectives. While the various parties identified many risks at various stages, they underestimated the difficulty of tackling a huge and complex project at the heart of achieving benefit delivery and post office automation, all in one go.
	We also investigated many basic management failures. When projects go wrong, which they inevitably do, management must face up to the prospect of failure and take prompt action to avoid abortive costs. Time and again in our work, we witness management's failure to get a grip. We might use fine words—the jargon and the long phrases in National Audit Office reports—but everything comes down to getting a grip. It took the former Department of Social Security a laboured 18 months to put the project out of its misery. The Government have set up better IT project management arrangements and I am sure that they take on board many of the lessons of good practice highlighted in our reports.
	Our first report this Session considered what has been done to encourage Departments to improve risk management. For risk management to become a standard feature of how they carry out their activities, the benefits that it brings to service delivery and safeguarding public money need to be understood and accepted by all staff. One would have thought that obvious and clear, but if it is so obvious and clear why has it not been done? For example, we found that only 25 per cent. of Departments set clear risk management objectives. The initial Cabinet Office assessment of departmental risk frameworks shows that some are much more developed than others.
	I hope that the report puts an end to the myth going round Whitehall that the Committee is a barrier to innovation and risk. Some permanent secretaries criticised my predecessor—in private, of course, not in public. The myth is, "If people in the civil service innovate and take risks, they might end up in the hot seat before the Committee." We will criticise Departments if they fail to identify and manage foreseeable risk, but we support greater innovation and we are prepared to accept that, on occasion, something unforeseeable will scupper even the best-planned project. One can at least plan for the future, but that is often not done. That was particularly the case with the former Department of Social Security's IT systems.

Brian Jenkins: Is the hon. Gentleman saying that we often find not a lack of understanding, but a lack of skill to implement risk assessment and risk management across the Departments? We do not oppose risk, but we do oppose the inability to carry out a proper risk assessment and put in place adequate management strategies at the start of a project.

Edward Leigh: That is absolutely clear and we shall continue our work on it. We believe that risk taking and innovation are wholly consistent with careful and proper control of public money. To follow on from that intervention, if Departments have sound control systems they are more likely to have the confidence to innovate, because they will be able to take account of adverse circumstances. In the game of politics, we all know that policies, Ministers and requirements change all the time. Risk management will become an integral part of how Departments operate. Their civil servants have the skills to identify and assess risks and take the action to manage them. Having the right skills to manage risky projects is a salient issue.
	I want to make as an individual a point that I put to the Treasury permanent secretary. It is worth reminding the House that those in the highest echelons of the civil service have, without exception, a background in policy rather than project management. Perhaps for that reason, those people of honesty and integrity, who have brilliant minds, sometimes fail to get a grip on major projects. Time and again, they are called to our Committee to explain themselves.
	No project director—no one who has ever attempted to run a Government project—has ever become a permanent secretary in the history of the civil service. That says something about the culture, which needs to change. There is now a culture of delivery and the public expect first-rate public services across the nation. We expect our senior civil servants to have hands-on experience of how to deliver a successful project. We found that one project was run by seven people over its lifetime. Some lasted just a few months before being shuffled off to another part of the management structure.

Geraint Davies: Many people might find it unbelievable that no permanent secretary has run a project in his entire career. Can the hon. Gentleman explain what he means? Do not those who join the civil service run projects and work their way up or is he suggesting that all such people are parachuted in at senior level?

Edward Leigh: No. Project director is a term of art and no person responsible over months and years for delivering a major IT project such as the benefit payment card—the one in the hot seat—has risen to the top of the civil service. I put that to Sir Andrew Turnbull, the Treasury permanent secretary, and he could not deny it. To be fair to him, and as he said, permanent secretaries need many other skills. They have to advise Ministers, which may require a particular ability that does not arise from running projects, but the civil service culture is changing and many people will expect a different type of person to rise to the top.
	We welcome the Cabinet Office and Treasury initiatives to improve risk management by Departments, but they need to monitor how Departments implement their plans to ensure that they are underpinned by effective action to manage risks. I also welcome the decision that the public sector should apply the Turnbull requirements on corporate governance being adopted in the private sector. The Government must get to grips with finding ways to reward, encourage, promote and retain good project managers.
	My final theme is accountability, which is vital. Last February, Lord Sharman published a valuable review of audit and accountability in central Government and the momentum behind his recommendations must not be lost. Opportunities for Parliament to consider and legislate on issues of financial accountability are few and far between. Believe it or not, the Government Resources and Accounts Act 2000 represents one of the few opportunities to do so since Gladstone's time. My predecessor and the Committee were disappointed that the Government did not take the opportunity to iron out anomalies in the financial accountability arrangements, although they were pleased to contribute to the Sharman review, which they established in response to our concerns.
	The Sharman report made a series of welcome recommendations designed to strengthen central Government audit and accountability arrangements. The Committee endorsed that report in our sixth report in 2000-01. It recommended that, as a matter of principle, the Comptroller and Auditor General should audit all executive, non-departmental public bodies, that his access rights should be on a statutory basis, and that if a Department has a substantial stake or influence or if a company has a public interest role, he should be eligible for appointment as auditor of companies.
	The report went on to recommend that external validation of performance information for central Government should be progressively developed. It also made a number of recommendations to bring central Government corporate governance arrangements into line with best practice in the private sector to address issues of audit burden and the effect of audit or risk taking, and to ensure that best use is made of audit work.
	We are still waiting for the Government's response. The report was produced almost a year ago, and the Government have still to respond, but I think that they will fairly soon. The report covers important matters of direct concern to Members of the House, and further delay would be unacceptable. I know that the Treasury has been in close contact with the CAG and his team on the practical issues of implementation, and encouraging progress has been made. If—I use the word advisedly—the Sharman recommendations are implemented in full, that will be a significant step forward for accountability to Parliament.
	Two issues may cause difficulty. In our report on the Sharman review, the Committee raised the issue of access to the civil list, which is the one area of royal spending outside our remit. Since 1988, the National Audit Office has had access to relevant information held by the royal household relating to the use made of the grants paid by Departments to meet the costs of royal travel and the royal palaces. The Comptroller has produced reports on both those grants, which the Committee has examined. Indeed, we considered his report on royal travel only last week. Both reports provided an opportunity for the palace to show that it has taken seriously issues of costs and efficiency. It has done pretty well, and I think it has proved the case for greater transparency. I urge the Government—I mean this sincerely—to reconsider the question of the CAG having similar access rights to the civil list.
	Two other bodies are currently outside the scope of our remit, the first of which is the BBC. It is essential and right that there should be improved accountability to Parliament for the funds spent by the BBC. The sums are large: some £2 billion each year. Believe it or not, Gavyn Davies, now the chairman of the BBC, recommended when he chaired the review on the future funding of the corporation that the CAG should have access to the BBC. That was before he became chairman. That is the same man who recommended that Parliament should have some access to the BBC. That view was supported by the Select Committee on Culture, Media and Sport and by Lord Sharman.
	All those parties failed to be convinced by the corporation's line—in my view, it is a line—that parliamentary accountability would impair editorial independence. Examinations of the value that the BBC gets from the way in which it uses our money could be completely separate from editorial decisions. We would not get involved in who should be on programmes and who should run the corporation. We, on behalf of the people, merely want some idea of what the BBC is doing with £2 billion each year.
	I should be pleased to hear from the Chief Secretary whether he has consulted the chairman of the BBC on this point. I know that the Financial Secretary will reply to the debate, but the Chief Secretary will be writing to me on this matter. Has Gavyn Davies changed his mind? Why should he change his mind?
	A similar point was made in the 1960s about the CAG's access to universities. It was said that there would be difficulties with academic freedom and independence, but no one would now suggest that his involvement in that sector has compromised academic freedom. The NAO spends its time examining implementation of policy across government without the need to question the policies in the first instance.
	If every family in the country is compelled to pay the licence fee—they are not compelled, but we all know that they do so—it is a poll tax by another name. I believe that that large sum of money should be subject to the same scrutiny as all other taxes, and we will pursue that point.

Richard Bacon: rose—

Geraint Davies: On a point of order, Mr. Deputy Speaker. Is a discussion of the BBC's finances in order? I would welcome a report on the BBC, but we have not had one, and I do not think that we should discuss the matter. I bow to your wider wisdom, Mr. Deputy Speaker.

Mr. Deputy Speaker: We are hearing a report from the Chairman of the Select Committee. He is alluding to something that might be, so I do not think that he is straying from the reasonable terms of the debate. I am prepared to hear what he has to say on that matter.

Edward Leigh: I shall give way to my hon. Friend the Member for South Norfolk (Mr. Bacon).

Richard Bacon: I was interested in what my hon. Friend said about academic freedom. Does he agree that, far from compromising the BBC's editorial independence, scrutiny of its finances by the CAG could enhance its independence? Since the CAG has had oversight of the finances of universities, there has been a growth in academic freedom. There are now joint honours degrees in basket weaving and sociology and a professor of in-flight catering. By analogy, surely the BBC should welcome the chance of greater independence that scrutiny brings.

Mr. Deputy Speaker: Order. That was an overlong intervention.

Edward Leigh: My hon. Friend has made an interesting and worthwhile point, and I look forward to hearing him develop his arguments.
	Similar arguments apply to whether the CAG should have access to the Financial Services Authority, which was established as a company limited by guarantee with many of the attributes of a public body. Its purpose is to protect the public's interests. It is funded by a compulsory levy on the 34,000 firms in the financial services sector.
	I was shocked to discover that the CAG, Parliament's watchdog, has no access to the FSA. As the Equitable Life saga showed, the citizen has a direct interest in the authority's work. It is crucial that there is some accountability to Parliament for the way in which it discharges its functions. Parliament has no power to obtain independent evidence on its activities. That is a matter of some urgency, and I look forward to hearing what the Chief Secretary has to say about it. Greater transparency would bring benefits, so that another Equitable Life fiasco could be avoided.

George Osborne: Is it not striking that, of all the issues on which I have received correspondence from my constituents, the Equitable Life case is the one on which I have received the most, yet as a Member of Parliament I am not able directly to examine the FSA's work? That concerns many of my constituents. I fully support what my hon. Friend has suggested.

Edward Leigh: I am grateful to my hon. Friend for his support. We look forward to hearing what the Government intend to do about these sensitive issues that are of huge importance to many people.
	We have a clear agenda for the future. We shall focus on issues that directly affect the public, and shall ask the questions that they want to ask on topical issues. We are shortly to consider access to and quality of higher education. We have work in hand on the millennium dome and the inappropriate adjustments to NHS waiting lists.
	We will be asking how the foot-and-mouth crisis was handled, about the financial implications for the taxpayer of the events at Railtrack, about the lessons that can be learned for the future management of and investment in the railways, whether the way forward for London Underground—when it is eventually decided—provides the best value for money, and what lay behind the suspension of individual learning accounts. We will aim to get to the bottom of those matters, and offer recommendations for improvement.
	I am glad to stand here today as Chairman of such a distinguished Committee. Our Committee has a long history, but the careful stewardship of my predecessors has ensured that it has remained relevant. We have a serious role to play in improving the administration of government, and I am delighted that my colleagues on the Committee are so adept at what they do. By holding to account those responsible for delivering public services, the Committee aims to ensure that there is a vital check from which the general public can take much confidence. It is a great privilege to chair the Committee.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. The Chairman of the Committee has been given a certain licence in introducing his first report, but I will not necessarily apply it as widely to other Members.

Gerry Steinberg: I do not present as sleek a figure as I had hoped following the obesity report. Obviously the recommendations are not working.
	I greatly enjoy serving on the Committee. The work is the most interesting that I have experienced in nearly 15 years as an MP. The Committee does a genuinely worthwhile job. I must admit that I have served on other Select Committees that I felt were a waste of time, because Governments—Labour as well as Conservative—never seemed to listen. This Committee's work seems very relevant, and we receive positive responses, which makes our work worth doing. I become cynical as I grow older, but serving on the PAC strikes me as an excellent way of spending my time.
	I thank all the Committee's staff for doing a tremendous job, and for being so helpful and obliging. Sometimes people who are getting old, as I am, forget what they have done. They forget that they already have their papers, and ask for them again. We never have any problem on such occasions, because our staff are so helpful. I also thank the National Audit Office for its help and expert advice. Its outstanding professionalism goes without saying, and it makes life a lot easier.
	Yesterday we received a delegation from the South African Public Accounts Committee, which asked, among other things, whether we were given any secretarial support. I said that we were not, but I should have said that we can call on 750 auditors at any time. We could be described as the most-briefed Committee in the House, with the best possible support.
	Let me join the Committee's Chairman, the hon. Member for Gainsborough (Mr. Leigh), in extending my thanks and good wishes to Ken Brown, the Clerk, who retired earlier this year. His influence and personality will remain with the Committee for many years. He is greatly missed, and I wish him a long and happy retirement. He was a genuinely nice man, and there are not many people of whom that can be said. I thought a great deal of him.
	I wish good luck to our previous Chairman, the right hon. Member for Haltemprice and Howden (David Davis), who has taken what must now be an almost impossible job. Did I say that I wished him luck? I am not sure that I wish him too much luck—a little bit of luck, perhaps.
	I also congratulate our new Chairman on his recent appointment following the general election. We are monitoring him carefully to see that he does his job well. So far we have given him 9½ out of 10, so he is okay.
	Unlike the Chairman, I do not want to trawl through all that we have done. I want to concentrate on three reports on the national health service and some of the issues in them that we have identified as giving cause for concern. Many of those issues were discussed at a valedictory hearing with Sir Alan Langlands, the departing chief executive of the NHS.
	It is clear to me that the NHS executive has experienced great difficulties in overseeing and monitoring the activities of many NHS bodies. Consequently, management failings have caused serious problems in the service, resulting in the wasting of billions of pounds over the last 10 years or more. In, I think, 1996, the previous Government introduced regional executives, but I do not believe that they ever succeeded in doing the job that they were meant to do. In my view, their purpose was to link the centre with those working at local level; but they were unaccountable, and often failed to pass on authoritative guidance from the NHS executive to trusts. In many instances, the priorities of both this Government and the last were not apparent locally.
	One example of the executive's lack of success in preventing management failings is the control of hospital-acquired infection in acute NHS trusts. Our Chairman mentioned that. A hospital-acquired infection may result in prolonged or permanent disability, and a small proportion of patients die. Such infections add to patients' discomfort and to the length of their stay in hospital, which itself causes problems.
	Hospital-acquired infection was the subject of a PAC report entitled "Inpatient Admission, Bed Management and Patient Discharge in NHS Acute Hospitals", about which I shall say more shortly. It was a damning report, which severely criticised the management at all levels. As the Chairman said, the cost to the taxpayer is some £1 billion a year—an incredible amount. In view of that, and in view of the suffering experienced by about 100,000 patients each year, one would have thought that trust managers would make the problem a priority. According to a National Audit Office report, however,
	"in a number of NHS Trusts Chief Executives may have a low level of awareness of infection control issues and . . . may be unaware of the extent and cost of hospital acquired infection and how it is being addressed in their NHS Trust".
	One trust allocated the measly sum of £500 or so to its infection control team in 1998, while another allocated £1 million. That illustrates the discrepancy mentioned by the Chairman.
	In many NHS trusts, hospital-acquired infection has generally had a low profile. Although the Department of Health has launched initiatives, particularly in the past two years, we found that a quarter of trusts' service agreements with health authorities did not cover infection control services, and that when they were covered they were often inadequate. We found that, contrary to guidelines issued by the Department in 1995, direct involvement of chief executives in strategic management and supervision was very low. We also found that 21 per cent. of trusts had no infection-control programme, and that only 11 per cent. of the programmes that did exist had been approved by chief executives.
	That is a perfect illustration of the NHS executive's failure to convey the seriousness of some NHS problems. We noted that there was scope for savings of some £150 million a year if infection rates could be reduced by a mere 15 per cent., but that the issue was not taken seriously by senior managers of trusts. Not only is this costing the taxpayer huge amounts; tragically, people are losing their lives.
	Last Thursday, going home in the train, I was making some notes in preparation for my speech. Incredibly, when I opened the Evening Standard I was confronted by an article on this very subject. It was headed:
	"Doctor's campaign against 'filthy' wards"
	and, below that,
	"GP takes action after hospital superbug kills his wife".
	I shall quote extensively from the article, because it sums up the tragedy and the fact that not enough is being done about it, although we have taken up the issue.
	The article says:
	"A retired GP has launched a campaign to improve hygiene in hospitals after his wife died from a superbug she picked up on a 'filthy' ward while recovering from a routine operation."
	The retired GP in question was Dr. Roger Arthur. The article continues:
	"His wife Patricia, 73, died in St Helier Hospital in Carshalton last month from the superbug methicillin-resistant streptococcus aureus, or MRSA, an infection which kills 5,000 hospital patients a year and is a factor in the deaths of 15,000 more.
	Dr Arthur says the real figure may be much higher.
	The scale of the problem is highlighted in the fact that, at the time of Mrs Arthur's death, St Helier had a dedicated MRSA ward, designed to keep affected patients in isolation—but it was full.
	She had gone to St Helier for surgery to remove a benign obstruction in her bowel. Her husband said: 'The operation was a success and she was discharged after eight or nine days.
	I noticed she had a bit of a cough but she seemed fine. However, when we got home she seemed to become ill and within 10 hours I could see she was going downhill fast. We went back to the hospital and they did some tests. The doctor came back and told us that it was MRSA.'
	Mrs Arthur died from the infection four days later.
	Dr Arthur, from New Malden, has little doubt how his wife became infected. He said: 'The ward she was on was absolutely filthy. There were sweet papers, fluff, old bits of Elastoplast and the tops of disposable syringes behind the bed when we came in, and still there when we came out.
	I ran my finger along the windowsill by my wife's bed. There was a thick layer of dust and a vase with dead flowers. There were cleaners around but they seemed to be cleaning the middle of the floor and not bother anywhere else.
	I was told there was a ward for MRSA patients but that was full, so people with the infection were remaining in normal wards and infecting other patients.'
	St Helier Hospital was the subject of a damning report last August by the Commission for Health Improvement, which said levels of cleanliness were 'seriously compromised', with wards smelling of urine and mortality rates significantly higher than the national average.
	A Department of Health spokesman said: 'The Government takes the issue of hospital-acquired infections very seriously and believes infection control and basic hygiene should be at the heart of good management and clinical practice in the NHS. A compulsory national surveillance service is being developed and a first phase, focusing on MRSA, was launched in April 2001.'"
	That Department of Health spokesman may well be right. However, the PAC met Sir Alan Langlands and Liam Donaldson, chief medical officer, to discuss the report on 6 March 2000. Two years later, the problems are still occurring and that is not good enough. The Government's response was quite encouraging, but it is clear that there is much to be done. When we read about such a case, it is obvious that something must be done pretty quickly.
	Everything that Dr. Arthur says was borne out in our report. Over the past eight years, isolation facilities have been significantly reduced, which must have contributed to the problem quite significantly. The majority of hospital-acquired infections are caused by bacteria. Some infections spread from person to person. Antibiotics have been used successfully for more than 50 years to control and to overcome bacterial infections. That has led to the emergence of highly resistant strains of bacteria. They are commonest in hospitals where high antibiotic usage allows organisms to evolve. The close concentration of people with increased susceptibility to infections allows the organism to spread.
	MRSA poses one of the biggest threats to infection control in hospitals. In some, it is endemic. Cleanliness is paramount but I was staggered to read in the report—I could not believe it—that effective hand washing or hygiene was very poor in hospitals. It says:
	"A number of studies have generated data that confirm that Doctors who decontaminate their hands between seeing patients reduce hospital infection rates. Yet many observational studies, mainly conducted in intensive care units, show low rates of hand washing especially among Doctors. Insufficient washbasins, supplies of liquid soap and paper towels, are some of the reasons that have been given for this."
	I have no reason to believe that the NAO report is not correct. If even the doctors cannot do that, and they know the problems that it will cause, that is outrageous. For many years I was a head teacher at a nursery school. One of the first things we taught the children about hygiene was that they must wash their hands very carefully. Goodness gracious me: if we are teaching young children of four and five to do that, it is a shame that doctors themselves cannot do it. It is incredible that doctors are contributing to that horrific scenario. However, new clinical governance arrangements are being introduced. I hope that that appalling situation will be addressed vigorously.
	As I have said, the PAC has commented on the need for better co-ordination within and between NHS organisations. In our report on in-patient admissions and bed management, we were concerned at the delay in many hospitals in discharging patients owing to poor co-ordination within hospitals and with outside agencies, which meant that some hospital beds were occupied virtually unnecessarily.
	The NAO report highlighted 20 areas where performance at many trusts could be improved to match the lead of others. That would result in fewer cancelled operations and shorter waiting times for emergency patients, and reduce delays in discharging patients from hospital, which in turn would yield significant savings and free up resources for improving other aspects of patient care.
	Often patients are brought into hospital far too early. Incredibly the report showed that if there were a 10 per cent. increase in same-day admissions, it would release about 180,000 bed days for alternative use. Few hospitals had effective systems for monitoring and co-ordinating key resources such as beds and theatre time.
	In particular, the Committee was concerned that in more than 90 per cent. of trusts bed managers obtained their information on bed availability only through physical inspection and telephoning wards throughout the day. That seems archaic in a modern NHS. On any given day, around 6,000 over-75s who are ready to be discharged from hospital are blocking beds and costing the NHS £1 million.
	In fairness, the Government have recognised the scale of the problem and are taking action. For example, only last week, my local social services department was informed that it had been allocated £1.886 million to ease bed blocking in the next financial year. There is a severe problem. The Government are doing something about it but we must ensure that even more is done.

George Osborne: The hon. Gentleman is right that efforts are being made to improve the discharge of patients from hospitals, but does he agree that we need a joined-up approach, to use the jargon? We need to look at the closure of care homes and of places in care homes in wider society, because that provides less opportunity for discharging people from hospitals.

Gerry Steinberg: The hon. Gentleman is right. I do not intend to get into a political battle with him over the issue, but he should remember that the Conservative Government encouraged the increase in the number of private care homes, which are now being sold off for property development, reducing the number of care places. I will not go into that. Let us try to keep it non-political this afternoon but I agree that there must be a joined-up approach and much more co-ordination between the NHS and local social services departments. More care places must be found.
	The real problem is clearly outlined in the report, which informs us that the number of general and acute beds fell from 200,000 in 1986 to 138,000 in 1997, a loss of 62,000 beds. For years I was warned by health authority officials that efficiency gains of 3 per cent. a year that had been demanded since the 1980s would eventually have a detrimental effect on local health services. As a result, beds have been lost and there has been an increase in bed occupancy and reductions in staff. The efficiency savings became cost-cutting exercises. The cumulative effect of those efficiency savings has been an increase in bed occupancy from about 70 per cent. to over 90 per cent., which leaves little capacity to cope with peak demand.
	I shall now be a little controversial. I do not think that matters have been made any better—in fact, they may have been made a lot worse—by the new private finance initiative projects, which appear to result in the loss of further beds. We are told that bed numbers in those projects are agreed by health managers and independent experts. I have had a lot of experience—I am not being arrogant, because one of the first PFI hospitals in the country was at Durham.
	It is not the so-called experts who make the decisions about bed numbers, but the financial consortiums. I know that from my own experience. The new university hospital in Durham opened recently and, for the six or seven years since the building of the hospital became a possibility, I was told that it would have enough beds. However, within a week of the hospital's opening, it was clear that it did not have enough beds, and that there was a severe shortage. That is not surprising. The number of NHS beds has fallen by around 2 per cent. a year since 1980, but admissions have risen by some 3.5 per cent. in the period. Given those statistics, it is no wonder that there is a bed shortage.
	The NHS is under constant scrutiny by the PAC. As a consequence, there has been a significant improvement in management over the years. There is no doubt that, during the past few years, there has been a significant strengthening in accountability and performance monitoring in the NHS. That is partly due to the excellent reports that we receive from the National Audit Office, and the work that the Committee does. That may sound arrogant, but I believe that the PAC's work has helped encourage the improvements.
	Government spending is not as straightforward as it was years ago. It used to be that only Government Departments spent millions or billions of pounds on services, but now executive agencies and quangos spend billions of pounds of public money every year. For the sake of continued accountability, efficiency and best value, the NAO and the PAC must scrutinise all public spending.
	In the previous Parliament, we failed to persuade the Government to legislate to ensure that. However, Lord Sharman, who was commissioned by the Government to carry out a review of Government audit and accountability, has recommended that the NAO should be appointed automatically as the auditor of all newly created executive non-departmental public bodies—in other words, quangos. I was pleased with that recommendation, and I hope that the Government accept it.
	That has already been happening in practice. For example, the NAO was given the job of auditing the new Learning and Skills Council and the Postal Services Commission. However, I believe that that appointment should have been automatic. In that way, Parliament would be able to ensure that all such organisations were accountable to it, and therefore that all public expenditure was accountable to Parliament.

David Rendel: When I rose in the equivalent debate in December 2000, I noted that there were so few hon. Members in the Chamber that I would have to speak for an awfully long time if the debate was to continue until 7 o'clock. On that occasion, I did not fill all that time, and you will be pleased to hear, Mr. Deputy Speaker, that I do not intend to continue today until half past six, or whatever time the winding-up speeches might be expected to begin.
	It is perhaps a pity that so few hon. Members want to take part in this annual debate. After all, it covers a huge range of Government affairs, and it offers Members an opportunity to speak about a large number of specialist interests. I am sorry that more do not choose to do so. I am equally sorry that the debate does not seem to attract an enormous amount of attention from the press. However, perhaps that is just the way of things.
	Like the Committee's new Chairman, the hon. Member for Gainsborough (Mr. Leigh), and the hon. Member for City of Durham (Mr. Steinberg), I shall begin by paying tribute to Ken Brown, the PAC's former Clerk, who retired at Christmas. As the hon. Member for City of Durham said, he was an enormously nice man, but he was also extremely helpful. I probably bothered him with my questions about the workings of the PAC as much as anyone, with the possible exception of the Committee's previous Chairman, the right hon. Member for Haltemprice and Howden (David Davis). He always took the time to explain to me everything that I had to have explained, however idiotic my questions must sometimes have seemed.
	It was great proof of the esteem in which Ken Brown was held in the House, and the respect that was felt for him, that so many hon. Members and others attended a farewell party for him on the Terrace. They had known him during his long service in the House, and valued the work that he had done. Not only that, but some who attended were aware that his father and grandfather had both acted as Clerks in the House. I hope that he has begun what will be a long and happy retirement, with many happy memories of this place as a result of the tributes that were paid to him on that day.
	I also pay tribute to the PAC's previous Chairman, with whom I like to think I worked effectively during his period of office. I hope that I shall continue to work effectively with the new Chairman as well, but the right hon. Member for Haltemprice and Howden made a name for himself as a good Chairman, raising the Committee's prestige and increasing its influence in parliamentary and national affairs. It is to his credit that the PAC should continue to be held in the respect that has been its due for a long time. The Committee is an all-party body, and always reports unanimously. That is what gives it its strength.
	I am pleased to be on the Committee, and the hon. Member for City of Durham made it clear that he felt the same. It is a good Committee, and I recommend membership to any Back-Bench Member, in government or opposition. Membership probably amounts to one of the most powerful positions available to people who are not in the Government, and I hope that other hon. Members will seek to become members of the Committee. I understand that some parties have not always found it especially easy to fill all the places on the Committee. Sadly, my party does not as yet have so many places to fill, so the difficulty is not so great. However, that may change in the near future.
	I think that it is a great pity that we should have found it difficult sometimes to find members for the Committee. The PAC is a very interesting and powerful Committee to belong to. It is one of the few Select Committees in which Back-Bench or Opposition Members can make a real difference to the way in which things work, by influencing Committee recommendations that are then implemented by the Government. Normally, only Ministers can do that, but the PAC gives Back-Bench Members that power. That is why I recommend membership of the PAC heartily to those hon. Members who have not taken up the option so far.
	As is true of all Committees, however, changes perhaps need to be made to the PAC. The Committee has been in place since Gladstone's day, and it may be time for us to rethink our way of working. I am delighted that the new Chairman has decided that we should all go on an away day to try to work out whether changes need to be made.
	I suggested a number of changes in my equivalent speech a year and a bit ago, when we last had this debate in the House. Since then, more matters worthy of consideration have come up; among the issues then raised was the question of whether we need a second PAC.
	As has been mentioned, the PAC is a very hard working Committee, which takes up an enormous amount of its members' time. It is possible that we should distinguish between bigger cases and smaller ones, with the second Committee discussing the smaller cases, and the main Committee discussing only those cases of really major importance.
	I am sure that that proposal will be welcomed by the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb). He is one of the critics of the Committee to whom the new Chairman referred in his speech. When the hon. Member for Gainsborough talked about this particular criticism, I was sorely tempted to pretend that I was in some pantomime, and to shout, "He's behind you!" However, I resisted that temptation.
	One criticism that I did not mention in 2000 is the sheer length of time that it takes for reports to come before us. Today, the House is discussing reports that appeared before the PAC a long time ago. The initial incentive for the NAO to draw up a report will have made itself apparent even before that, and we are talking about difficulties with Government policies that first arose two or three years ago. Those issues may well have been clarified and dealt with properly many months or even years before this debate began.
	It is a pity that the process should take so long. A matter has to be pulled before the NAO, then the NAO has to investigate it and publish a report. That report then has to be the subject of a Committee hearing, then the Committee must look at the transcript of that hearing and prepare a draft report of its recommendations. That draft report has to be approved and sent off to the Treasury for its response. Finally, the Treasury's response is discussed in this annual debate.
	It is a lengthy process. If we could find some way to speed it up, we could deal with some matters rather more quickly than we do at present.

Richard Bacon: The Government closed down individual learning accounts on 23 November. The National Audit Office is investigating the matter and hopes to publish a report later this summer, perhaps by May, so that it can be discussed by the Committee before the summer recess. Does the hon. Gentleman agree that that is a model of how we should do things in the future?

David Rendel: The hon. Gentleman makes a good point. Perhaps he will back me on this point when we come to our away day—it certainly sounds like it.
	Another matter that we might want to discuss in changing the structure of the Committee is a way of asking a further set of questions. We each have a quarter of an hour in which to ask our questions and although the Chairman is very good about sometimes allowing us back in at the end of the session, it would be useful to have a second go. We may think of something that has come up as a result of other members' questions to the witnesses.
	Occasionally we may need a second hearing. There was one occasion recently, which I shall refer to later, when we had a second hearing on the same subject. Recently we were discussing whether we might need another second hearing when it seemed that a witness had been a bit misleading and needed to be called back. There may be a case for having occasional second hearings as well.
	We might need to think more about whether members should have a chance to discuss the recommendations that come out of the hearing. At present, we have our hearing and the NAO drafts a report with the Chairman as to what recommendations they think should come out of the hearing. The recommendations come before us as a draft and are often passed more or less on the nod. When it comes to making recommendations, the influence of individual members is not that great.
	I should like to talk about the powers of the NAO. This comes out of one of the reports that we were discussing on the Government Resources and Accounts Act 2000 and the Government report on the investigation into audit arrangements by Lord Sharman. I hope, Mr. Deputy Speaker, that you will allow me, in discussing this, to talk a little about the BBC, as the sixth report of the 2000-2001 session gives its response to the Sharman report which covered the BBC. There is a good case for increasing the powers of the NAO, as the Sharman report proposed. I hope that the Government will take due account of the Sharman report—after all, they set it up. Sometimes, sadly, Governments set up reports and then pigeonhole them and forget about them for a long time. I hope that that will not happen with the Sharman report, because there are strong arguments for increasing the powers of the NAO to investigate all areas of Government spending of taxpayers' money, not least the areas mentioned by the Chairman—the civil list, the Financial Services Authority and the BBC. I find it extraordinary that the BBC's accounts are not audited by the NAO. There is every reason for that to happen.
	Some people have argued, in response to Sharman, that many private sector auditors are at least as good and effective as the NAO and that we can trust them. I have no doubt that many private sector auditors are extremely good at their job. However, it is worth remembering what happened at Enron. At least one very well known private sector auditor seems to have gone way off the rails not only in failing to audit Enron properly in the first instance but then, when things turned out to have gone badly wrong and the audits were found to have been a failure, in apparently starting to shred some of the papers to hide the evidence. If that can be done by an audit company of the quality and prestige of Andersens, I hate to think about what goes on in the private sector audit world. There are better arguments than ever for saying that when taxpayers' money is at risk, we ought to have our parliamentary auditors, the NAO, in charge of the audit.

George Osborne: Is it not also a case of democratic accountability? We are talking about public money, and Parliament, which is the representative of the people, should be able to hold the BBC to account for the way it spends its money so that we can see whether BBC News 24, for example, which costs tens of millions of pounds, is money well spent.

David Rendel: I entirely agree with the hon. Gentleman. I am sure that that is the first principle—where public money is involved, it should be audited by the NAO, which is Parliament's auditor. The NAO acts on behalf of us all; it acts on behalf of the taxpayer. It is not the Government's auditor, but the auditor for Parliament and the public. That is why it should, on the whole, audit public money. I was trying to argue that the only possible counter-argument might be that a private sector auditor might do a better job. For the reasons that I have given, that is no longer arguable, if ever it was.
	I should like to go through a few of the reports and highlight some of our most important findings. Unless I was not listening hard enough, I do not think that either of the two previous speakers mentioned the sheep annual premium report. A very interesting point came out of that report. We heard that some of our farmers tried to flout the rules on the sheep annual premium. In some cases, for example, they reported to the Government that sheep had been stolen and tried to claim for them. It later turned out that they did not report the theft of these sheep to the police. They had simply disappeared, for some reason. That raised queries as to the real status of the sheep.
	In other cases, farmers had their sheep counted on one side of the hillside, knowing very well that those doing the counting would have to drive the long way round to get to the other side. Meanwhile, the sheep went over the top of the hill and were duly counted on the other side as well. I am not suggesting that that sort of thing was widespread, but it was going on.
	The witnesses made the interesting point that we are inclined to believe that we are the only ones who obey the rules coming out of Brussels and the European Union. We believe that those rules are purely for our benefit, because we obey them and everybody else ignores them. In fact, it was clear from what we heard that every country in the EU believes that it alone obeys the rules and that every other country ignores them. Some of those who inveigh against the rules coming out of Brussels and like to pretend that ours is the only country that always obeys them might like to consider that every other country in the EU holds that belief.
	The important report on hospital-acquired infection has already been mentioned. The potential saving of £150 million has also been mentioned. That shows how much we need to do something about the problem. I do not think that the two previous speakers mentioned that recently there have been reports of whole wards, if not hospitals, being closed down by viruses that have taken hold. That indicates that the problem that we highlighted some time ago is still with us, and that savings can still be made.
	We asked the chief executive why we were not spending money on better cleansing of hospital wards so that we could save this huge sum of money. He replied that the notion of spending to save
	"is not one that people always latch on to immediately in a system where short-term affordability is often a barrier."
	That important point has wide significance. Sadly, the Government often control their finances on a short-term cash basis. That is not always the case, given the move towards resource accounting, but there is nevertheless still close cash control on many organisations such as the health service. That often leads to greater long-term expenditure. This case in point illustrates my wider point.
	The interesting point to come out of the report on hip replacements was, as the Chairman said, the lack of co-ordination between the various trusts. The PAC has been saying that we do not have joined-up government, nor do we have joined-up hospitals and trusts. We found that some hospitals discovered that a particular type of hip replacement material worked better than others, yet that information had not been sufficiently spread around the whole health service. As a result, some hospitals continued to use old implants and materials which had been proved less successful. That shows the need for a joined-up health service.
	The Government response to the Chinook report came out this year. We now know that this is a topical issue because on 5 February we expect the report from the House of Lords Committee which was set up partly in response to our PAC work on the issue. We do not yet know what it will say, but from the types of witnesses it has called and recalled at least some indications are that it will take a rather different view from the Government's. I hope very much that it does.
	The Government have always argued that they cannot possibly change the decision of the initial inquiry because there is no new evidence. That inquiry itself changed its conclusion between the initial decision taken at the bottom level by the people who did the work, who decided the pilots could not be blamed, and the air commodore at the top who decided that the pilots were to blame. Yet there was no new evidence between the initial decision at the bottom level and the top level decision. Already, the Ministry of Defence has changed its decision without new evidence. For the Government to pretend that they cannot override that decision and reach a different conclusion without new evidence is thus contradictory.
	I hope that the Lords report will give the Government a face-saving way of withdrawing from the obdurate way in which they have faced the issue until now. I strongly believe that whether the pilots were to blame or not, there is no proof that they were to blame, and that is the issue. The tenor of these reports is that in such cases the pilots should never be blamed unless there is absolute proof that they were undoubtedly to blame.
	There are a number of different possible causes of the Chinook accident, including the malfunction of the full authority digital electronic control, or FADEC, system. Another possible cause, raised by one of my constituents, could be the late change of weather conditions in the area around the Mull of Kintyre. My constituent, who used to be involved in these things himself, pointed out that in the old days pilots taking off on this sort of mission would have a face-to-face meeting with the meteorologists so that they could be told not just what the overall weather pattern was, but in more detail what likely changes they might meet during their flight. That no longer happens. There may be a case for saying that it should have happened and that if it had happened, the accident would never have taken place. If that is so, this is another case of a Government cut leading to a disastrous consequence. That point, too, weighs against any suggestion that there is absolute proof that the pilots were to blame.
	Sadly, I was not at the hearing for the in-patient administration, bed management and discharge report, so I hesitate to say too much about it, but I attended the meeting at which the report was discussed. Clearly, major costs are involved. The major lesson from this is that if we are to reduce the costs of so-called bed blocking, we need to put more money into the social services functions of local authorities. That is how we can get or keep patients out of hospitals if that is the best thing to do. The hon. Member for City of Durham pointed out that the private finance initiative has sometimes cut the number of hospital beds and that clearly is happening. It is not the major worry, but it is a worry.
	One of the difficulties with this whole issue is that funding for social services comes from local authorities while funding for the health service comes from the Government, although local authorities get a lot of their funding from Government too, so the position is not quite so clear cut as one might think. The difficulty of two sources of funding going in two different ways demonstrates once again a lack of joined-up government. It is good news that this Government have put such emphasis on the need for joined-up government, but in this case at least they have not yet properly resolved that problem.
	It might be odd for me, as an instigator of the NAO report on SERPS, to allow the debate to pass without commenting on that report. I doubt whether a PAC report has ever led to such a large-scale change of Government policy in financial terms. We are talking about a policy change worth some £12 billion—a huge sum. The PAC can be proud of its efforts, first, to highlight the scandal of SERPS for widows, and secondly to refuse to accept the Government's first attempt to redress the balance. The fact that we hammered away at it and insisted on a better solution to the problem is to our credit. Many people throughout the country will benefit from the way in which we forced the Government to change their plan.
	The report on parole is also particularly interesting in the light of more recent events. At the time I put it to Mr. Narey that
	"the fact of the matter is that almost certainly some of them"—
	that is to say, some prisoners—
	"will be innocent, even though the court has found them guilty. In those circumstances it does seem to me less likely that they will get parole."
	Mr. Narey replied, quite simply:
	"I would agree with that."
	A few weeks ago we heard of the case of Stephen Downing, who spent some 27 years in prison for murder—a far longer term than most murderers spend in prison. Why? Because he was innocent and refused to say that he was guilty. In the terms of the Prison Service, because he was not facing up to his guilt he was not eligible for parole. The injustice done to that man was vastly exacerbated because of the policy, which as far as I know is still in place, that if prisoners insist that they are innocent, in practice they will not get parole. That can lead to a huge injustice, as in Mr. Downing's case. I hope that the lesson from our hearing will now be taken on board, strengthened by Mr. Downing's case.
	It would also be unusual for me to allow this debate to pass without mentioning the English Heritage report. We had a double hearing on it. Although the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) might think this is a minor matter, the hearing was fascinating, perhaps because it was the sleaziest subject of all that we came up against. We discovered that Sir Jocelyn Stevens, who had been chairman of English Heritage, had persuaded his board to allow Kenwood House, a public asset, to be leased to the ex-King of Greece for his daughter's wedding and, extraordinary as it may seem, the terms of that agreement were such that although the ex-King would cover all the expenses of the function, the only extra profit money to English Heritage was to be by way of a donation, the size of which would be decided by the ex-King of Greece. I hope there has been no other case in which a public asset has been rented to a private individual in return for money, the amount of which that individual decides. It is extraordinary that anyone could deal with a public asset in that way.
	What was worse was that when the chief executive of English Heritage was asked whether the donation had been made and said that it had, on the first occasion she failed to reveal, first, that it had only just been made, and then only in response to a letter from her to the—by then—ex-chairman, pointing out that the donation had not yet been made and asking whether it was not about time that it was made, since the PAC hearing was about to take place. Secondly, she failed to reveal that although the donation had been made, it had been made not by the ex-King but by the ex-chairman of English Heritage—an extraordinary story. Rightly, the PAC decided to bring the chief executive back for a second hearing when the story became clear. Perhaps not entirely surprisingly, the former chief executive of English Heritage is no longer its chief executive.
	We also had a hearing on the blood service. It became clear that volunteers who gave blood were not being properly treated by the blood service, and that some were inevitably being put off as a result. We cannot afford to put off volunteers who give their time and their blood to the national health service. There has been a failure to care for them, in that they often queue for a long time. They sometimes have to wait around for so long that their cars exceed car parking times, but they receive no help to pay any parking fine, although I understand that such help is given in some other parts of the health service. So if volunteers are kept waiting too long they have to pay fines in addition to giving their blood voluntarily.
	Although the recommendation that something be done was fully accepted, people are still being kept waiting for long periods. I know of a young man who recently went to give blood for the first time. On arrival he told the assistant, in answer to a question, that he had recently been on holiday in Mexico, among other places. The assistants failed to tell him straight away, "I am sorry, but because of the malarial problem you cannot give blood now; we would love to have you back in six months." He waited two hours to reach the front of the queue, at which point he was sent home because his blood could not be taken. That is not the way to treat volunteers if you want to encourage people to give of their own blood freely for the sake of the wider community. The fact that that was still happening a week or so ago shows that, despite our recommendation, we have not yet been able to cure the original problem.
	That is enough from me on the individual reports. I shall end with a few more general comments about general themes that have emerged from our reports.
	Repeatedly, very large computer projects have gone wrong. We should draw from that experience two lessons, which we have discussed in the PAC. The first lesson is that in a massive computer project, the chance that somewhere in the project something will go wrong that will affect the whole project is much greater. If the project can be split into more manageable modules, so that each module is to some extent self-standing, and perhaps even usable on its own even if other modules are not yet ready and working, it may be possible to save some of the costs involved in searching through one massive computer system to locate an error.
	The second lesson is that the bigger a computer project is, the harder it is to transfer the risk to the private sector if it is being run as a PFI project. If, two years down the track, with a year to go before the policy must be implemented according to the law that is introducing the new scheme of social services, tax or whatever, one suddenly discovers that the major computer project simply does not work, what can one do—pass it over to a new computer firm? Of course not. A new firm would not have nearly enough time to write a new computer programme to implement the policy. The only thing that can be done is to pour more and more money and resources into the firm that has already shown that it is not running a good project, to help it get that project up and running in time. So, far from the risk's being passed to the private sector, the risk often remains with the Government. The bigger the computer project, the greater the likelihood that that will happen.
	I appeal to the Government—I hope that they will listen—to try to modularise their computer projects into smaller, bite-sized chunks, although "bite-sized" is probably the wrong word to use when talking about computers. I hope that that approach will enable the Government to overcome some of the problems that arise when one failure in a massive project causes the entire project to go wrong, as has happened in one case that the Committee Chairman mentioned, or when, as has happened in other cases, a lot more money has to be poured in to ensure that the problem is overcome entirely.

Richard Bacon: The hon. Gentleman has given way very generously. Does he agree that although the issue of computer consultancy firms not providing an adequate service to the public sector is very serious, the issue of project management by the public sector, which has been alluded to, is crucial? The example comes to mind of the National Audit Office report on the implementation of the National Probation Service information systems strategy, which had seven programme directors in seven years. That is a fault of the public sector management, not of the firm.

David Rendel: Yes; there is undoubtedly a problem there, and I am grateful to the hon. Gentleman for drawing attention to it, although it is a slightly different problem from the one I was highlighting. I am sure that the PAC will want to examine it.
	There are problems with the private finance initiative in relation to large computer projects. There are also problems in relation to the transfer of risk in other areas, such as hospital-building projects, which the PAC has highlighted. Given that all parties are currently to some extent reviewing PFI—what it means to pass things across from the public to the private sector—and given that, approaching from different angles, we are all perhaps forming views different from the ones that we started with, I hope that all parties will, during their review of the PFI, recognise the following important truths about risk transfer.
	There is a genuine difficulty with transferring risk. It is never possible to transfer the whole risk. If the public sector needs something, it can never manage to transfer the whole risk in a project, and to pay for the whole risk to be transferred when one is not actually transferring the whole risk is a waste of money. PFI projects, by their nature, are bound to be more expensive, partly because one is paying for the risk factor and partly because one is probably paying for higher interest rates, because it is well known that, on the whole, the private sector cannot borrow as cheaply as the public sector can. The complexity of PFI contracts is such that, very often, PFI projects take longer to manage. We have seen that particularly in the hospital sector; we have read recent reports of the length of time that some PFI projects are taking.
	I am not arguing that PFI is never the right answer, but we need to answer many questions about it if we are to expect it to be the solution for many major Government projects in future, particularly because we are now adopting resource accounting. If resource accounting means one thing, it should surely mean that it is easier for the Government to justify putting public capital into major assets than it has been. Because we are no longer doing cash accounting, we no longer expect the whole value to be paid for up front. The way in which assets are accounted for is changing and it should be easier for capital to be spent in the public sector in future.
	The second general theme that emerges from many of the reports is that of interdepartmental working and the issue of joined-up government, which I have mentioned already once or twice. As a member of a local authority, I used to worry about interdepartmental working, even within the local authority. Very often in a local authority you find, as I am sure that you are aware, Mr. Deputy Speaker, that the individual departments are very much segmented. A housing officer in a local authority, may never end up having anything to do with planning, finance or recreation.
	In the private sector, people are often deliberately moved between different parts of the company to give them wider experience and enable them to take senior management posts. That does not tend to happen in local authorities and it certainly does not tend to happen in Government. I hope that among the themes that emerge from some of the reports that the Government will take notice of is the need to ensure that there is interdepartmental working and cross-Government working and experience, so that civil servants can move more easily between Departments. Many of our witnesses have said that they would like that to happen, but in practice there does not seem to be much effort going into it. I hope that the Government can do something to help that process.
	We do useful work, and I believe that it is valuable work—the taxpayer benefits a great deal from the PAC's efforts—and it is also very interesting work. I am delighted to have had the chance to serve on the Committee for just over two years now, and I hope that I may be allowed to do so for some time to come. 3.30 pm

Geraint Davies: It is my privilege to speak—like last year, the press literally could not wait for this debate.
	It is crucial that we all emphasise, as the Chairman of the Committee and others have, the importance of the NAO and the PAC to good governance in Britain. We have a dynamic whereby an auditor-supported Select Committee scrutinises value for money, management, efficiency and effectiveness, with a Chairman from the Opposition, and enables feedback from the Government to produce change in the interests of the taxpayer and public service.
	It is a great privilege to serve on the primary Select Committee, which was, of course, established by Gladstone to scrutinise all Departments. The Chairman of the Committee referred to other areas of public expenditure, and there is a good argument to extend the remits of the PAC and the NAO to chase virtually all public money and ensure parliamentary accountability. I say that to ensure that my position is clear.
	I, too, pay tribute to the former Clerk, Ken Brown—a very effective Clerk and a very nice man, as has been said—and to the Committee's previous Chairman, the right hon. Member for Haltemprice and Howden (David Davis), who did sterling work. I also welcome the new Chairman.
	I shall not deal with the generalities for too long, but I want to refer to risk, which has been mentioned. I believe that, increasingly, the highest risk is to take no risk, because we end up with no innovation, and the civil service culture is gradually changing in that way. However, when all is said and done, we have the best civil service in the world, and our role is to try to make it even better.
	I shall allude to the reports that refer to some of the less contentious issues on which we concentrate—the NHS, the PFI and the railways. [Interruption.] I was just checking that hon. Members were awake. Hon. Members will know that the NHS is the biggest employer not only in Britain but in Europe, with some 990,000 employees in a business that delivers approximately 5.5 million operations every year. Given that massive bulk of work, it is no surprise that we can find opportunities to encourage improvements in value for money and effectiveness in delivering high-quality public services.
	In commenting on the Committee's reports on the NHS, I should like to focus on patient care, variations in performance and co-ordination between the NHS and other agencies. Hon. Members have already referred to the report on hospital-acquired infection, in which it was noted that about 15 per cent. of such infection could be eliminated, saving approximately £150 million. Indeed, as my hon. Friend the Member for City of Durham (Mr. Steinberg) said, our report highlighted the fact that more hand washing would significantly reduce the incidence of infection in the NHS.
	Despite the appalling case that my hon. Friend mentioned involving St. Helier hospital, Carshalton, I am pleased to say that the Government have responded with improved education and hygiene training, by spreading best practice, including on prescribing antibiotics, and by introducing a new surveillance system for hygiene. There is a new traffic light rating system, under which red is the worst, then amber and green. I understand that no hospital has a red rating for cleanliness, but I am keen to discover St. Helier hospital's current status. The point is that, once more, the PAC has focused attention on an area of public concern, which then agitated change in the public interest.
	We found a massive variation in the effectiveness and cost of hip replacement operations throughout the country; people waited for different times and costs differed. I am glad to say that we are beginning to see progress, with the establishment of the National Institute for Clinical Excellence making recommendations on which type of hip is most effective. Indeed, we are making progress in shortening the time people wait for their hip replacements; I understand that in some areas waiting times have been reduced by between 20 and 40 per cent. That is another example of our being an agitating force and of our information provoking improvements in public service.
	Sir Alan Langlands, who oversaw the management of the NHS, stressed in his valedictory report the need to produce national improvement standards and to introduce benchmarks and performance targets. He welcomed the establishment of NICE and the Commission for Health Improvement as quality and standards watchdogs. We shall continue to ensure that standards continue to rise, and we shall focus on those areas where that does not happen.
	Patient management and waiting lists are hot, contentious issues. In a recent report we revealed that about 6,000 patients may have been affected by the fiddling of waiting lists, but in the wider context of 5.5 million operations the figure represents less than 0.1 per cent and the problem is now being sorted out. I am pleased to say that, in response to some of our recommendations, the NHS is beginning to introduce better scheduling systems and a new so-called national booked admissions programme. We are agitating for positive change, rather than moaning about isolated problems.
	The hon. Member for Newbury (Mr. Rendel) mentioned the difficulty that we face because of bed blocking. The simple fact is that NHS activity is increasing. About 6 per cent. more funding is going into the NHS each year, whereas social services funding is increasing by 3 per cent. a year. That creates an imbalance, with insufficient places on the outside to take the number of people coming through the NHS. The situation is better than it might otherwise be because of the new focus on rehabilitation, whereby people return to their homes rather than having to be institutionalised in care homes.
	The biggest growth in NHS operations is in the number of day cases, which have increased from 1 million to 3.4 million a year over the past 10 years. Contrary to what my hon. Friend the Member for City of Durham said, people do not necessarily occupy beds for a long time; they go home, which is obviously a good thing. During the valedictory hearing, the point was made that, if the totality of care beds were to move from acute or intermediate care perhaps to short stay or institutional stay provision, we could more rationally invest our money in the right proportion of different types of bed.
	Those involved in private nursing care have talked to me about the difference between the marginal costs of providing beds inside and outside hospitals. Of course, one of the driving forces for the NHS is the need to deliver an extra 5,000 intermediate-care beds, with an extra £900 million of investment, and another 1,000 extra beds in NHS hospitals, with another £300 million. So there is a response, and there is a new move towards care trusts, in which social services and health services are managed together to provide an integrated service.
	There has been much debate about who manages the health service, but mismanagement occurs in only a small minority of cases. I have been a local authority leader, I have run my own business and have worked for a multinational company, and I believe that local authorities that deliver services efficiently should assume responsibility for running social services when they are next to a hospital trust that is not delivering them properly. That is part of a larger debate, but the simple point is that there must be joined-up government. The report that considered bad management focused on an issue that, no doubt, will be the subject of much more discussion.
	Private finance initiatives also have a bearing on the NHS. As we always do, the Committee produced a number of reports. In particular, we considered the Fazakerley prison PFI, which involved Group 4 and Tarmac. The interesting point related to refinancing and the way in which money was reborrowed. Group 4 and Tarmac were set to make a windfall of £10.7 million, and clawback had not been negotiated in the contract. However, Group 4 and Tarmac kindly returned £1 million. They probably realised how much they were going to make and did not want to make too much of a fuss.
	Since then, reports have considered the effectiveness of 121 PFI contracts that will be responsible for about £100 billion of public expenditure over the next 20 years. We found that 80 per cent. of managers thought that the PFI deals were very good, which suggests that there was a good response to them. However, when we dug under the surface, we found that only 55 per cent. of them kept open-book accounting, that only 49 per cent. were involved in benchmarking their prices and that only 43 per cent. knew what profit the private contractor would make. Only 15 per cent. had refinancing gains.
	I mention those figures as a pointer for the future. The Committee should closely monitor the requirements in reorchestrated PFI deals to ensure that we deliver value for money and that we do not simply rely on the testimony of the managers who look after the PFI deals. They simply say that the contracts are good value for money. However, when we asked them whether they had refinancing deals or how much had been made by the private sector, I wondered whether they were capable of making the necessary judgments. Clearly, the question about PFIs should not be who is right, but what is right. What is right is a matter for us and we must ensure that we obtain value for money.
	For more politically sensitive issues such as the tube, the Government should, and will, make their decision according to the acid test of value for money. They should not decide on the basis of what people think but on the basis of what is the most cost-effective way of delivering a quality public service.
	The Committee's duty is not to consider PFIs in generic terms. Some say that they do not like PFIs and others say that they do. The evidence that the Committee has obtained testifies to the fact that some PFIs clearly work while others do not. However, the information that we have before us will help us to provide advice on how the ones that fail could have done better and the ones for the future could do better still.
	The relatively uncontentious report entitled "National Savings: Public-Private Partnership with Siemens Business Services" has not received much press publicity because it simply said that it was a PFI done well. The objectives were clear, provisions were made for clawback, risk management and risk transfer and—without going into too much detail—National Savings renegotiated to reduce its exposure to fraud from £250,000. Provisions for clawback, compensation and penalties would appear on a checklist of best practice, and one finds such provisions in this case. That might explain why many people do not find the report interesting, but it should be read by other managers involved in PFI negotiations to ensure that best practice is benchmarked, as it is in the NHS with the National Institute for Clinical Excellence and the Commission for Health Improvement. We can learn lessons from failure and from success and those lessons should be taken on board in a world of joined-up government.
	Another contentious issue in the public arena is the railways. The Committee's report, "Strategic Railway Authority: Action to Improve Passenger Rail Services", found that significant problems existed, in particular with Railtrack. As we know from a previous report, it had been privatised for £1.9 billion when it was worth £8 million, which represented a loss to the public purse of £6 billion. It was not only handed over cheaply, but it failed to keep a proper asset register on the condition of its assets. That fact came to light as a result of the events that have been in the public eye. It did not know the state of its assets and our evidence was confirmed by the testimony of Tom Winsor, who told the Transport Sub-Committee that the trouble with Railtrack was that it was incompetent and ineffective in the management of its assets and in the treatment of customers.
	The Committee found that Railtrack had made no real attempt to gain information on the assets making up the network, and that was one of the key reasons why customer needs were not being met. We produced our report and asked questions about punctuality, reliability, passenger satisfaction, cleanliness, late-running trains and so on. We discovered that the rail authorities did not have sufficient information or an incentive to provide the service that people naturally expect.
	I remember vividly that we discussed the fact that Connex was considering—it still is—taking out seats so that people could stand on trains. That is supposed to provide more capacity. Our hearings on the rail regulations produced some unfortunate findings. The Committee stressed that the problems were not just with delivery, but with the overall structure. I am glad that, following the hearings and the Committee's insistence that it consider corporate governance and delivery, changes in Railtrack have occurred. We are moving towards requiring it to produce an asset register in the near future. We will therefore be able to build the 10-year plan on a more solid base.
	I have kept my comments to a minimum given the generous amount of time that others Members have taken. Under new leadership, the Committee will have an increasingly important bearing on the delivery of public services. I am glad that its dynamics mean that it will not simply take potshots at the Government but will generate positive recommendations for change. In 95 per cent. of cases, such recommendations lead to improvements in public services. It has been a pleasure to share my thoughts with the House.

Richard Bacon: As the hon. Member for Croydon, Central (Geraint Davies) concluded his speech, I thought I heard the hon. Member for Newbury (Mr. Rendel) say that the debate still had three or four hours to run. I read the speech that the hon. Member for Newbury made in the previous debate, and I note that he began his remarks by saying that he was conscious that no one else was seeking to catch Mr. Speaker's eye. I therefore came prepared with lots of documents, not least because I know that my hon. Friend the Member for Tatton (Mr. Osborne) finds it amusing when I quote from documents in the Committee. Of course, I subscribe to the Fidel Castro view that if a speech is less than four hours, it cannot do any good. However, I suspect that I would try your patience, Madam Deputy Speaker, and that of the House were I to go through all the documents that I have brought with me.
	My hon. Friend the Member for Tatton and I are at a disadvantage. As new Committee members, we have not witnessed much of the work that is being debated today, so I have decided to restrict myself to a couple of general themes that are of enduring interest to the work of the Committee and the NAO, which I shall illustrate with quotes from Committee and NAO reports.
	I begin, however, by joining other hon. Members in paying tribute to the work of the retiring Committee Clerk, Mr. Ken Brown, who has been enormously helpful. I wish his successor, Nicholas Wright, every success in his new job. He has already been very helpful to Committee members. I also pay tribute to the NAO, in particular to the work of its press office under the able stewardship of Gabrielle Cohen and Keith Davis, both of whom have been enormously helpful.
	The Committee's work is of central importance. The act of this House of Commons taking money from taxpayers by compulsion and forcing them to pay into the consolidated fund—into the Exchequer—is a cardinal act. It is of central importance that the House has that ability, but it is equally important that having taken money from taxpayers, the way in which it is safeguarded, looked after and spent is transparent, open and accountable.
	In the last debate on public accounts, the then Financial Secretary said:
	"I conclude from the debate that the Government need to focus on two matters. First we must continue to improve the management of the systems by which public money is collected and deployed. Secondly, we must continue to improve the management of projects to deliver public services."—[Official Report, 14 December 2000; Vol. 359, c. 865.]
	That sums up the themes that I want to address. The first is that we need good procurement. Central Government—the same applies to other forms of government, such as local authorities and health authorities—have a role in that. The public sector needs to understand procurement and to be a good buyer. That is central to successful government. It is welcome that the Office of Government Commerce is taking a greater role under its new chief executive, Mr. Peter Gershon. He has appeared before the Committee two or three times and is doing an excellent job in persuading Departments of the importance of skill in procurement. I sometimes think that he has an uphill struggle, but he is trying to make it a priority in Departments.
	My second theme is that of good project management, which the Financial Secretary also mentioned. I would add good risk management to that, because they go together. Risk has been mentioned by a number of hon. Members. No one on the Committee is opposed to the public sector taking risks. It is, however, a matter of understanding what the risks are and, having identified them, ensuring that they are carefully managed. We all take a risk when we walk out of the front door, but it is knowing that there are risks and properly managing them that matters.
	In the document "Working with Suppliers: The Code of Good Customer Practice" the Office of Government Commerce says:
	"Central civil government will work to a high standard of professionalism when dealing with suppliers. It will do this by",
	among other things,
	"effectively managing risks during a procurement process and working with suppliers to reduce risks during the business relationship."
	Both of those are central considerations.
	In that earlier debate, the hon. Member for Edmonton (Mr. Love), who used to serve on the Committee, referred to information technology projects. He could, however, have been referring to any kind of project when he said:
	"We should recognise that they"—
	IT projects—
	"are not a marginal technical decision but part of the mainstream business activity of departments, and must be treated as such. We need to manage to staff in a way that is appropriate for a project. We must provide training and incentives to keep the staff with the project while it is introduced. The status of staff, especially in the public sector, must be appropriate to their responsibilities. Most important, staff must be accountable, not only for their success, but for any failures."—[Official Report, 14 December 2000; Vol. 359, c. 854.]
	When Mr. Gershon from the Office of Government Commerce came before the Committee, we discussed civil service culture, the approach to the management of staff and the attitudes of staff. I was interested to know whether he thought that the way in which the civil service moves staff around, which is inherent in its culture although not in that of the private sector, is fundamentally inimical to successful project management. Mr. Gershon agreed. He said:
	"In my experience of private sector organisation, yes of course they want to appoint the best people to the job, but they also want the project to be completed successfully . . . and some say, 'No, we need to promote that man in situ because he is critical to the project, we need to keep him in place, but he should not suffer financially or careerwise as a result'".
	He had spent 30 years in the private sector, and in his limited experience of the public sector he saw less of that approach in the civil service, for good and understandable reasons.
	Mr. Gershon went on, however:
	"But as there is an increased focus on the successful delivery agenda, there is a question of whether we need to put in place mechanisms that might help retain key people in key jobs, and something ought to be done about succession planning so that if someone does move for legitimate career reasons, there is someone to backfill in."
	That brings me to the point that I raised with the hon. Member for Newbury, which is that the public sector does not seem to have taken that approach on board.
	The NAO issued a report on the implementation of the National Probation Service information systems strategy. The project overran its budget by about 70 per cent. and ended up costing £118 million, which was about £50 million more than it should have cost. That project had seven project directors in seven years, which was fundamentally the fault of the project managers, not of the suppliers. As my hon. Friend the Member for Gainsborough (Mr. Leigh) said, project management is central. It is time that that was more widely understood and acted on in Whitehall. Successful project managers need to move to senior leadership and senior management positions in Whitehall to a greater extent.
	Some years ago, the Cabinet Office published a report on the use of consultants in the public sector. In a previous incarnation, I used to work for the consulting industry and came to know the report rather well. On page 59, it points out:
	"In most effective organisations, management skills are high and they manage consultancy projects very tightly."
	Again, just as it was possible to delete the reference to "IT" from my earlier quotation, it is possible to delete the word "consultancy" from this one and still be left with the idea that it is cardinally important to manage projects tightly.
	The report went on:
	"To maximise ownership and accountability the same individual, where possible, will often see the project through from inception to implementation."
	I think that the Government are alive to that approach, but it is a case of promulgating it through the Departments and making sure that people act on it. It is essential that the Government understand the central importance of project management in what they do rather than in what they say.
	In the short time that I have been on the Committee, it has dealt with the loss to the Revenue from fraud on alcohol duty, which amounted to £858 million, the loss of £48 million as a result of the project for the National Probation Service and the collection of the benefit payment card cancellation, which cost more than £1 billion. That is nearly £2 billion, equivalent to nearly 1p on income tax. It is right for us as elected representatives to ask how much hard work had to go in to earn the money to pay the £2 billion of tax to the Exchequer which was then wasted.
	The subject of risk management is closely tied up with that of project management. Paragraph (iii) of page 1 of the Committee's report, "Managing Risk in Government Departments states:
	"Risk management will only become a normal and integral part of the way departments and agencies operate if civil servants have the skills to identify and assess risks and take the action necessary to manage them."
	The hon. Member for City of Durham (Mr. Steinberg) pointed out the need to ensure that civil servants have the skills to identify risks.
	The recent closure of individual learning accounts, which was alluded to earlier in the debate, raises the question: where was the risk management? We might ask where was the understanding, even, that any risks were involved. I sat through the proceedings of the Education and Skills Committee yesterday morning and listened to the evidence of officials. The Committee was concerned about the apparent absence of any recognition that there were serious risks that needed to be managed. The Audit Commission published a report called "Ghost in the Machine", on the need to watch out for computer fraud in the public sector, and found that, again, the question of risk management appeared to have been completely ignored.
	My next point concerns where the Committee should begin to focus its attention in future. According to a newspaper report in December, fraud and waste cost the NHS between £7 billion and £10 billion a year. I asked the chief executive of the NHS about that last week when he came before the Committee to talk about the report on inappropriate adjustments to waiting lists. I recently received the transcript of the proceedings from the Committee Clerks, and the stenographer had typed the figures as £7 million and £10 million. I corrected them to billions, and then I thought that I had better attach a note to say that the figures should be in billions because the sums are so huge that people would think that I was not serious.
	Seven to ten thousand million pounds is enough to pay for between 30 and 43 hospitals like the recently completed Norfolk and Norwich hospital. In fact, that hospital is still being built, but patients are moving into it. It is a PFI project on the borders of my constituency. I mention in parentheses that no one bothered to build a road to the hospital, so it is difficult to get to even though it is consuming £229 million of public money. My point is that between £7 billion and £10 billion goes south every year in the NHS, and if that estimate is not correct, we need to get to the bottom of it. Those losses have been happening for years, and the matter needs much closer attention than it currently appears to receive.
	The Department for Social Security, now the Department for Work and Pensions, is another area that needs the Committee's steady attention. Indeed, we shall soon be looking at fraud in income support. I have before me the DSS appropriation accounts, and I am looking at the page on which the CAG sets out in a certificate his views on the accounts. Just as the auditors of a private company sign off accounts, the CAG signs off the DSS accounts, in this case to the House of Commons. He has qualified his opinion of these accounts, saying:
	"In my opinion, the appropriation account properly presents the expenditure and receipts . . . except for irregular expenditure arising from errors in benefit awards and from fraudulent benefit claims".
	I tabled a parliamentary question to the Department for Work and Pensions asking in how many years since 1972 the DSS appropriation accounts had been qualified in that way. I was a little concerned when the Department phoned to ask me what was irregular expenditure, so I pointed to the CAG's certificate and said that that was precisely the term that he had used.
	If one looks at the itemisation of that irregular expenditure, one finds that the DSS estimates that losses through error and fraud for income support and jobseeker's allowance in 1999–2000 were £1.32 billion, and in 1998–1999 the CAG noted that the Department had estimated that the combined level of fraud on income support and jobseeker's allowance could have been as high as £1.53 billion. Those are huge sums. If one considers only the health service and the DWP, one finds that huge sums are disappearing without the NAO being able to identify where they have gone because the Government are not managing the situation closely enough.
	I share the concern expressed by my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) that in recent years the Committee has spent about 4 per cent. of its time examining the accounts of the royal household. Although it is entirely appropriate that the royal household, which is the subject of great interest, is transparent, open and accountable and that its accounts are examined by the House, we should concentrate on going after the billions before we worry about the £5 million spent by the royal household. In any case, that figure is a reduction because the household is being extremely well managed, as was made clear in the evidence that we heard last week.
	The final matter that I want to mention is less significant in macro-financial terms, but it is none the less of huge importance for many people. I refer to the sources of public funding for students. The NAO has recently produced a report on the subject, "Improving Student Achievement in Higher Education", on which we will shortly take evidence from the permanent secretary at the Department for Education and Skills.
	The report contains an interesting chart that shows the 23 different sources of public funding from which students may seek support. The system is extraordinarily complex; for example, single parents who want a child care grant go to one source and those who are eligible for school meals grants go to another. One practically needs a PhD simply to understand the method of obtaining student support. I have raised the matter with the NAO, and I continue to encourage it to examine it.
	The complexity of the system has direct implications for the economy, effectiveness and efficiency with which public money is deployed for student support. On the two occasions on which tranches of the student loan book were sold, it was at a very large discount to face value. The reason is that the quality of the student loan book is not very high—a lot of the debt is not repaid. As a result, the market requires a high discount before it will buy the debt.
	As I said, last year the then Financial Secretary alluded at the end of his speech to the importance of focusing on collection systems as well as on systems for deploying public expenditure. If we could find a more economical, effective and efficient system for collecting the moneys that students owe, and there are many possible models, we would do a great service to the taxpayer but, equally importantly, make it much easier for students from disadvantaged backgrounds to go on to higher education.
	Talking to people in my constituency on the doorstep and elsewhere has left me without the slightest doubt—I am sure that hon. Members on both sides of the House have had the same experience—that the extraordinary complexity of the student loan system has a big deterrent effect on a certain stratum of potential students who are on the cusp of deciding whether to go to university. That decision is as important for people from well-off backgrounds, but it is extraordinarily important to those who have not been used to getting into debt or who are from families in which no one has ever been to university. I hope that the NAO will take the issue seriously in future.
	In conclusion, I would just like to say what a privilege it is to serve on the Committee. As a new Member I still have a lot to learn, but I have been thoroughly enjoying the Committee's work. I believe that it plays an absolutely central role in ensuring that the money that we take from taxpayers is accounted for in an open and transparent fashion. The House of Commons, in sanctioning the Committee, is doing a very fine job.

George Osborne: I congratulate my hon. Friend the Member for South Norfolk (Mr. Bacon) on his speech and, in particular, on yet again mentioning his local hospital. He is truly adept at getting his local hospital into almost any speech and Committee sitting, and as a result he will no doubt get good coverage in the Eastern Daily Press tomorrow morning.
	Like my hon. Friend and other Members who have spoken, I am extremely honoured to be a member of the Public Accounts Committee and to take part in this debate. I was a Government special adviser at the late lamented Ministry of Agriculture, Fisheries and Food in the days when "special" and "adviser" were not dirty words, which my hon. Friend the Member for Aylesbury (Mr. Lidington) will remember. I remember discussing with Ministers the introduction of multi-billion-pound BSE compensation schemes. I remember the permanent secretary telling the Ministers, "It's all right for you; you just have to go before the departmental Select Committees. I'm the one who has to appear before the PAC." It was at that moment that I decided that, should I get into Parliament, I would try to become a member of the PAC, as it seemed like the right place to be. I was delighted when, by the mysterious powers of selection that the House uses to choose members on Select Committees, I found myself serving on the PAC.
	I genuinely feel that serving on the PAC has been about the most rewarding aspect of my work at Westminster since being elected. It is not only I, a Member for just seven months, who thinks so; refreshingly, the hon. Member for City of Durham (Mr. Steinberg), who has been a Member for 15 years, takes the same view. That shows what interesting and valuable work the PAC does. Like other Committee members who have spoken, I pay tribute to the people who support our work including, obviously, the National Audit Office, the Comptroller and Auditor General and their large staff, but also the people who service the Committee directly. Everyone has paid tribute to Ken Brown, but I also thank Nicholas Wright, who has stepped into his shoes. The Committee Clerk has an important function in servicing our work, and I pay tribute to both men.
	I thank Committee members, a couple of whom are still in the Chamber, for their friendly and generous welcome of new Committee members, The bipartisan—tripartisan, I should say, since the hon. Member for Newbury is here—nature of the Committee is its greatest strength. In our party-political world, the fact that all parties are represented on the Committee and that we agree reports together gives us enormous authority. Serving on the Committee is even more pleasant now that we are under the chairmanship of my hon. Friend the Member for Gainsborough (Mr. Leigh). He had a hard act to follow, it is fair to say, but he has done so with great aplomb and humour; I wholly approve of his relaxed and sceptical approach. I fully support people who, in seeking to reform Parliament, say that the Chairman of the PAC should be paid the same as Cabinet Ministers and get a Government car. I very much hope that my hon. Friend bears that in mind when he is deciding whom to call in the next meeting.
	Finally, I pay tribute to my right hon. Friend the Member for Haltemprice and Howden (David Davis) for raising the profile of the PAC. He has gone from the difficult job of sorting out the civil service to the almost impossible job of sorting out my party, in which I wish him every success, since the future of Conservative Members depends on it. When I was thinking of applying to become a Committee member, he told me that it would be a crash course in government. He was right; even though I have previously worked as a Government adviser, it is fascinating to see different aspects of Government work in Committee.
	In the seven months in which I have served on the Committee, we have examined the intricacies of air pollution policy and what it is like in the royal train, and we have witnessed some major successes. Despite problems with the hearing itself, the introduction of income tax self-assessment was an example of a massive project that was delivered on time and to budget, with savings in advance of those that were originally planned. I am afraid that we have also witnessed woeful failures, as Members have already mentioned. Most Committee members would probably agree that the most shocking and alarming hearing in recent months was the one last week on inappropriate adjustments to NHS waiting lists. That is a soft description of a shocking report on a gross abuse in the NHS.
	From what I have seen as a Committee member—I hasten to add that I have served as one for only seven months—the PAC works best when it fulfils what, I imagine, was its primary function when it was established by Gladstone, and operates as a forensic watchdog on behalf of the taxpayer, with a deterrent effect on the misuse and waste of public money. Returning to my anecdote about my days as a special adviser, when accounting officers are forced to approve an item of Government expenditure, somewhere in the back of their mind they should ask whether they could justify it to the PAC if they had to. That is our primary function. When Customs and Excise allowed hundreds of millions of pounds to be lost in alcohol duty fraud in a period of just three years because of lax enforcement and inadequate controls, its chairman must account for its failure before the PAC.
	We also looked at the NIRS2 information technology project and the cost of that overhaul. Tens of millions of pounds were spent because the people in charge did not anticipate changes to the welfare system; the project was not flexible enough to allow those changes to be built in without a massive sum being spent. As the hon. Member for Newbury said, by the time those people finally realised that that was problem, they had only one option, which was to stay with the existing contractor.
	Those are examples of the primary function of the PAC. At the risk of creating more disunity in the Conservative party, I disagree with my hon. Friends the Member for South Norfolk and for Bognor Regis and Littlehampton (Mr. Gibb) about looking at relatively small items of Government expenditure, as well as large items. Whatever the size of the budget that accounting officers manage, the fact that they may have to appear before the PAC has a great deterrent effect.

Richard Bacon: I do not believe that we should not look at small items. On the contrary, important lessons about openness, transparency, accountability and the right way to go about procurement and risk management can be learned from small cases just as much as large ones. I was merely pointing out that there are huge gaping holes in government which are not getting enough attention.

George Osborne: I am grateful to my hon. Friend. I fully support what other Members have said about Lord Sharman's recommendations. One gaping hole is the BBC; another is the Financial Services Authority. It will be interesting to see if the Financial Secretary to the Treasury says something about the Sharman report in his reply, but perhaps we shall have wait even more months for a response. However, my hon. Friend made a good point.
	The PAC is less successful when we try to get to grips with broad and nebulous issues, when there are not hard facts and figures, and there is not someone who is clearly accountable. I enjoyed our recent hearing on modern policy making in government—I enjoyed cross-examining the permanent secretary at the Cabinet Office about how many strategy units were looking at transport policy—but, nevertheless, we were not dealing with hard facts and a proper accounting officer. That was a less successful hearing. Perhaps we can look at that when we are sipping champagne and eating caviar on our away day; I hope that that away day does not come before the PAC, as we would have a bit of a constitutional crisis if it did.
	There is a genuine issue at stake: how do the PAC and the National Audit Office stay on top of the Whitehall landscape, which is undoubtedly changing, with a profusion of targets, initiatives, such as the private finance initiative, strategy units, aspirations, agencies and so on? As someone said to me, it has more units than the British Army and more tsars than the Russian empire. The PAC must get to grips with that and do what we do best—concentrate ruthlessly on a certain target or agency, examine the facts and see whether the benefits outweigh the costs. We should get behind the rhetoric, find out whether public money is being well spent and pore over the accounts. We should draw general lessons from the particular, rather than trying to do it the other way round. We should bear that general point in mind when considering the future of our work.
	The general lesson that has struck me most in the work of the PAC concerns the danger of arbitrary targets; I shall concentrate on that for the rest of my speech. There is a tendency in government—this is not a party political point, as this happened under previous Conservative Governments—to pluck arbitrary targets from the air and impose them on the civil service. Such targets often sound very nice—the obvious example is cutting waiting lists—but the result is often huge distortion in the way in which public services are delivered, as perverse incentives can emerge through attempts to meet them.
	The Committee saw such effects during our recent consideration of air quality. The Government have a reasonable aspiration to reduce pollution in the atmosphere. No one could disagree with that aim, but in seeking to achieve it, they have produced nine arbitrary targets. They want to reduce carbon dioxide by X amount, particles by Y amount and so on. When one considers how the targets were arrived at, one sees that, in this particular case, those who were responsible for them used pretty uncertain emissions forecasts that depended on unreliable factors such as projected economic and transport growth and all sorts of things that people find difficult to predict. Using that information, they produced a forecast of emissions and fed it into a computer model that was in itself extremely complicated and prone to error.
	Using that model, those involved formulated targets for air quality that depended in turn on variables such as the state of the weather. They then mish-mashed those targets with evidence of the health effects of pollution on individuals—more information that was pretty uncertain and unreliable—and suddenly produced nine targets. When they were doing that work, they had no idea about the targets' impact on society, the economy, public services, industry and so on. The one study that they carried out, which considered the cost of trying to achieve one of the targets in London alone, found that it would cost £100 million—and even then, the target would not be achieved.
	That is the danger of picking arbitrary targets. As I said, we saw it most powerfully in terms of NHS waiting lists. As we all know, the waiting lists initiative imposed the arbitrary target of reducing in-patient waiting lists by 100,000. I shall not get into a party-political argument about whether that was the right thing to do. None the less, I should like to mention an anecdote of the right hon. Member for Swansea, West (Mr. Williams), who is a wily dog in the Committee and a great source of entertainment. He said that Tony Crosland had told him that Governments spend four years trying to cover up the mistakes that they make in the first six months in office.
	It is tempting to apply that principle to the waiting list initiative, but I shall stick to the simple issue of its administration and deal with how it affected hospital admissions. The National Audit Office took a detailed look at the matter, on which the Committee has already had two hearings. The relevant report has been mentioned today. It is clear that immense pressure was exerted from the centre to ensure that the targets were met. It was probably political pressure. The targets gave rise to a range of very perverse incentives. Out-patient lists mushroomed. These so-called waiting lists for the waiting lists almost doubled to 450,000 people. Obviously, that happened because the pressure to produce the in-patient lists meant that people were pushed on to out-patient lists.
	Even more seriously, the National Audit Office found that there had been a significant distortion of clinical priorities. In producing its report, it surveyed more than 550 consultants. It found that 52 per cent.—more than half of all those who were sampled—said that working to meet the NHS waiting list targets meant that they had to treat patients in a different order from that which their clinical condition properly indicated. Some 20 per cent. of consultants said that they gave such treatment regularly. Indeed, when the NAO report was published, one orthopaedic surgeon, Dr. Gordon McLellan, from Oldchurch hospital in Essex, said:
	"I'm very pleased that the NAO has confirmed what consultants and patients have known for a very long time",
	which was that clinical distortion was occurring.
	Distortion was also evident at GP level. We considered in a hearing the effect of the North Staffordshire NHS trust giving £1,000 incentives for GPs to meet out-patient referral targets. In other words, there were incentives for GPs to stop referring people to hospitals so that those hospitals would have a better chance of meeting their waiting list targets. As is widely known, in at least nine trusts, that abuse went far beyond the distortion of clinical priorities and involved deliberate fraud and manipulation of waiting lists. Patients' records were altered and patients were inappropriately suspended. Some were not added to the list until the month of their appointment. Most scandalously, people were deliberately offered admission dates when it was known that holidays had been scheduled. The NAO found that at least 6,000 patients in nine trusts had been affected.
	When the chief executive of the trust came before the Committee, I did not find his answers very satisfactory. Frankly, I did not find convincing his assurance that the practice that I have described was not widespread, but was limited to the nine trusts that the NAO happened to investigate. Indeed, when I tabled a written question to the Health Secretary asking about the number of trusts in which more than 10 per cent. of patients were suspended from the in-patient list at any one time, I was told that there were 35 such trusts, including my own, the East Cheshire NHS trust. In one trust in Walsall, more than 30 per cent. of patients are suspended from the list at any one time. Although the Health Secretary says that on-the-spot inspections will now take place, I think that the Department of Health should adopt the NAO report's recommendation and conduct a proper investigation into trusts where evidence—on, for example, suspension percentages—suggests that there is a likelihood that some distortion might have taken place.

David Rendel: The hon. Gentleman mentioned one of the unsatisfactory answers that we received in the hearing. Does he agree that we received another unsatisfactory answer when we asked the chief executive whether there were any cases in which clinical authority was put behind management authority in priority in order to meet the targets? The chief executive said that he thought that no such case ever arose, but it seems entirely illogical to suggest that one can try to meet a management target of shortening waiting lists without making it more important than the clinical target.

George Osborne: The hon. Gentleman is absolutely right. Of course, that is exactly what happened in many hospitals and with many consultants, as they freely admit. The examples are legion.
	In conclusion, the setting of arbitrary targets and the creation of arbitrary incentives in the civil service will give rise to a range of perverse incentives, manipulations and distortions. That is human behaviour. It is very bad for public administration and can cause a gross breach of public trust, as the NAO found in terms of waiting lists. That has been one of the most valuable lessons that I have learned while serving on the Committee. We should continue to focus on the proliferation of Government targets. We must see how they are working in practice, how they were arrived at and the cost of trying to meet them. I look forward to doing that work and much other work on the Committee. 4.28 pm

David Lidington: It is a great pleasure to respond to the debate on behalf of the Opposition and to congratulate the Committee. In particular, I congratulate its Chairman, my hon. Friend the Member for Gainsborough (Mr. Leigh). I also congratulate those who have spoken: the hon. Members for City of Durham (Mr. Steinberg), for Croydon, Central (Geraint Davies) and for Newbury (Mr. Rendel), and my hon. Friends the Members for South Norfolk (Mr. Bacon) and for Tatton (Mr. Osborne). I want to begin by reassuring them, as some of them expressed concern about whether they might have been speaking for too long. We must remember that it was the late Mr. Gladstone himself who founded the Public Accounts Committee. He would have regarded even the 60-minute speech of my hon. Friend the Member for Gainsborough as a mere oratorical morsel and an introduction to some great speech that would have flown from his lips in the days when he stood in the Chamber.
	I want to add to the plaudits that many hon. Members have given my right hon. Friend the Member for Haltemprice and Howden (David Davis), the former Chairman of the PAC, and to the Committee staff, its former Clerk, and the Comptroller and Auditor General and his staff—the 750 accountants whom the hon. Member for City of Durham mentioned. Their expertise and skill enable members of the Committee, as they will be the first to acknowledge, to place senior civil servants under intense and searching scrutiny in open session.
	The PAC's work could be summed up as demonstrating the true ethic of public service. The speeches that we have heard from all parts of the Chamber show a commitment to search for examples of success, but also of failure, in order to seek remedies so that the people who send us here to represent them receive better quality public services in future.
	The debate revealed some interesting lessons from the PAC's experience that are relevant to the development of the Select Committee system. As several hon. Members have pointed out, the PAC is bipartisan or, indeed, tripartisan. Since taking on my current Front-Bench responsibilities, I have attended several PAC sessions. However, unlike the Financial Secretary, I have to be content with a seat in the one-and-nines at the rear. I have noticed that questions from Committee members are always courteous, but also insistent, relentless and thorough.
	The reports of the Committee and of the National Audit Office are written in lucid English, and render even the most abstruse topics of public administration comprehensible to inexpert minds such as mine. Fashionable jargon, such as "synergy" and "roll-out", is thankfully absent. The Committee is always well briefed. As the hon. Member for City of Durham said, the PAC has clout because it has resources, back-up and expertise that are not available to the departmental Select Committees. Perhaps hon. Members might like to reflect on that.
	The need for a partnership between the PAC and the departmental Select Committees is a theme of the Sharman report, to which several PAC members have alluded. That message was implicit in several speeches. My hon. Friend the Member for Tatton spoke of the enormous variety of inquiries that the NAO and the PAC carried out. The hon. Member for Newbury also drew attention to that. When I was asked to respond to the debate and went to pick up the relevant papers from the Vote Office, I was aghast to receive a pile of about 20 different reports. However, as my hon. Friend said, they provide a crash course in the workings of government.
	The PAC cannot be expected to do everything, however, despite the undoubted importance and wide-ranging nature of its work. That suggests that there should be a method of bringing together the work of the PAC, the departmental Select Committees and, for example, the Environmental Audit Committee. When my hon. Friend the Member for Tatton mentioned arbitrary environmental targets, it occurred to me that that was being considered not only by the PAC but by the Environmental Audit Committee, albeit from a slightly different perspective.
	Several hon. Members referred to the PAC's report on discharging patients from hospitals. That is standard PAC territory; good management makes a genuine difference to handling such discharges.

Geraint Davies: The NAO has a remit that covers almost everything, whereas that of the PAC is to focus on specific items that we believe to be problematic. Hence we are able to cope with a vast amount of work without support.

David Lidington: The hon. Gentleman makes a reasonable point. I am the last to argue that the PAC should try to narrow its interest or inquiries. In the previous Parliament, I served with the hon. Member for City of Durham on the Education and Employment Committee, and I share some of his frustration about the way in which members of a departmental Select Committee could labour for a long time on a report but feel that the effort was, if not worthless, then ignored by the Government of the day, of whichever political colour. I contrast the Government's approach to departmental Select Committee reports with that to PAC interrogations and reports. By "Government", I do not simply mean Ministers.
	Bed management can make a big difference to hospital discharging. My hon. Friends have pointed out other aspects, and the availability of care beds was the most telling example. Such considerations inevitably lead to policy; they are not confined to management. There are therefore roles for different Committees in trying to get to grips with complicated problems.
	I want to tackle two or three themes that have emerged from the debate. My hon. Friend the Member for Gainsborough drew attention to the PAC's prime duty of trying to monitor and improve the quality of financial management throughout the public sector. I agree with the importance that he placed on that task and his strictures on the need for timeliness in providing accounts. Unless that is done, no adequate scrutiny or check can be carried out on the quality of the financial management.
	Several hon. Members spoke about their belief that the civil service does not always rate project management experience as highly as policy experience. My days as a special adviser go back a few years. Then, the highest fliers in a department tended to be given jobs in policy-making, not management divisions. I hope that the Financial Secretary can say that that is no longer the case and that a mix of policy and management roles is regarded as a desirable part of the most talented civil servants' career paths.
	Good management can make a real difference to the quality of service, as we have seen in the Committee's reports on hospital admissions and bed management, on hip replacements, on managing the reduction in the number of vacant family quarters in the armed services and on the administration of the Siemens partnership with the Government.
	This raises a difficult question, however. When I was listening to the comments of the hon. Member for Croydon, Central about hygiene in hospitals, and the need to crack down on the problem of hospital-acquired infection, I felt—though I may have interpreted him wrongly—that he was placing a great deal of faith in central direction and centrally imposed targets. There clearly need to be proper scrutiny and audit, but any Government will need to strike the difficult balance between trying to impose targets and standards with the noble aim of driving up the quality of service that the public experience, and avoiding the risk of sapping the ability or willingness of those who manage the services locally to take initiatives to innovate and to develop a culture of responsibility down at the sharp end. There is always a risk of eroding a sense of local ownership of those responsibilities for the highest possible quality of service delivery.

Geraint Davies: I was simply trying to make the point that minimum standards of hygiene are essential to avoid a massive outbreak of infection that could kill many people. We found substantial variation in those standards, and we need to raise them. That being said, there are clearly grounds for local enterprise and innovation to push forward the best practice benchmark.

David Lidington: I am all in favour of disseminating best practice. The problem is that it is not enough simply to announce national targets or standards, if people do not have the commitment and sense of ownership at local level to drive up those standards and to take pride in delivering them to those whom they are responsible for serving.
	That leads me on to the way in which the Committee follows up the reports that it produces. We have heard good examples of marked improvements in the quality of public services as a result of what the Committee has said in its reports. One example was the Committee's report on hip replacement, which helped to persuade the Government to set up a national joint registry. The Government should be given credit for responding in that way.
	There have, however, been other examples in which a long time has elapsed between the problems being identified and action being taken. My hon. Friend the Member for Gainsborough referred to the Public Trust Office, in which problems were identified in 1994, and to the fact that no effective action had been taken five years later. The same criticism could be made of the inaction of the Housing Corporation after problems with the Focus housing association were identified in the early 1990s.
	I hope that the Government—or, perhaps, the Committee, if it chooses to do so—will follow up issues such as the management of finances in further education colleges, and the efficiency of management in the National Blood Service. In the latter case, the crisis in the service happened in 1997, and the PAC reported in April 2001. The Government response in October last year said that the National Blood Service had, at last, agreed a time scale for negotiations with its staff on changing terms and conditions, to bring about the improvements to the standards of service that donors deserved and which the PAC had supported; but that it would take up to two years—even after agreement had been reached—to bring those changes into effect. That means that perhaps seven years will have elapsed between the crisis arising and the changes being put into effect to tackle the shortcomings identified in 1997.
	I want to say a few words about the Sharman report, which is relevant to the sixth report of the Committee for 2000-01. I hope that the Financial Secretary will say something about this when he winds up the debate. It is nearly two years since the Government commissioned Lord Sharman to carry out his review, and nearly a year since he delivered the report. It is not unfair to ask the Government how much longer they intend to keep us waiting for their response. That response will be a big test of the Government's commitment to striking a fairer balance between the Executive and Parliament. At the risk of introducing a note of partisanship, I think that they have so far failed that test on issues such as the selection of members of parliamentary Select Committees, their failure to accept the report of the Liaison Committee, and the reform of the second Chamber. I hope that their response to Sharman will give them the opportunity to pull back some of the ground that they have lost.
	I support the call from my hon. Friend the Member for Gainsborough for the National Audit Office and the Public Accounts Committee to have access, as of right, to non-departmental public bodies. That would sit well with the suggestion made by my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) a few days ago, when he called for the heads of major NDPBs to be subject to interrogation and confirmation hearings by parliamentary Select Committees before taking up their appointments.
	I also agree with the comments of my hon. Friend the Member for Gainsborough about bringing the BBC within the scope of NAO and PAC inquiries. It seems logical that, so long as licence fee payers continue to pay what amounts to a form of poll tax, the BBC should be subject to parliamentary scrutiny in the way that my hon. Friend advocated.
	I hope that the Minister shows us that, on this issue at least, the Government are on the side of greater accountability and greater openness. That is the right way to go and the way to secure the qualitative improvement in public services that we all want to achieve.

Paul Boateng: This excellent and wide-ranging debate does credit to the breadth, depth and quality that one associates with the Committee and its reports. The Committee has a proud tradition, and Gladstone has been mentioned. He often is when the traditions of the House are discussed—and with good cause, as the Public Accounts Committee is one of his great creations.
	Those traditions were undoubtedly embellished by two Members who have chaired the Committee during my membership of the House: Lord Sheldon, one of my predecessors as Financial Secretary, and the right hon. Member for Haltemprice and Howden (David Davis). Both gave distinguished service. The task of chairing the Committee now falls to the hon. Member for Gainsborough (Mr. Leigh), who is, if I may say so, ably suited for the responsibility.
	I say that having had considerable experience of the hon. Gentleman over a long period. In the 1980s and 1990s, he and I spent many hours in Committee with my hon. Friend the Member for City of Durham (Mr. Steinberg), who sends his apologies for being absent. He must attend an urgent constituency function, so he has left for Durham. We have all had the opportunity to observe each other at close quarters and, having listened to the hon. Gentleman's speech, I am bound to say that it did not disappoint in any way.
	Membership of the Committee, and certainly its chairmanship, requires an acute, sceptical, inquiring and independent mind, which the hon. Member for Gainsborough has always had. He has a further quality that is important when considering such subjects as those dealt with by the Committee—a sense of humour. Without that, one simply could not get through.
	This afternoon has been an eye opener in a number of ways. I have been exposed to two of the new boys on the Committee—the hon. Members for South Norfolk (Mr. Bacon) and for Tatton (Mr. Osborne). Both show the qualities that I have described as being essential to Committee membership. The hon. Member for South Norfolk showed his skills as a wordsmith. Indeed, I note from "Dod's" that he founded a company dedicated to words, so his threat to detain us long was taken seriously.
	The hon. Member for Tatton has hopes for the fare at the away day. Although a member of the Committee, I do not seem to have been invited. Perhaps the fare will be too rich for my taste, but not rich enough for the hon. Gentleman, as I note, again from "Dod's", that he is related to a delicatessen on his mother's side. That might explain the nature of his appetites. By the sound of the Chairman's pre-emptive strike in terms of extending the Committee's scope to the Financial Services Authority, the royal household and the BBC, it will be an interesting away day and we look forward to the outcome of the discussions.
	On a serious note, Treasury Ministers and civil servants owe the Committee and those who serve it a debt of gratitude. On behalf of my Department, I associate myself with the gratitude and respect offered to the Clerk and the staff, particularly the outgoing Clerk, who gave a great deal of service over many years to the Committee and the wider public. Liaison between the Committee, its staff and various Departments of State is vital to the success of its work.
	The Committee benefits from the assistance of the Comptroller and Auditor General, Sir John Bourn, and his staff at the National Audit Office. Their financial audit work and value for money studies are key aspects of the structure of accountability that we are all concerned to promote. Their professional approach is welcomed by all.
	The Government are committed to improving the management of Departments. The Committee and the hon. Member for Gainsborough have been receptive to working with us to raise standards, and we look forward to a continuing and positive dialogue in the future. The Chairman and members of the Committee came to the Treasury a few months ago. It was an enormously helpful exercise, and I hope that we will be able to repeat it. The Government welcome opportunities to engage the Committee. We have a common agenda on public services, and a common interest in ensuring that the public get value for money, in promoting best practice and in encouraging improvements in departmental management processes and information.
	This year, the Committee has inquired into a wide range of areas, which has resulted in many valuable recommendations. Its recommendations have undoubtedly helped to improve the delivery of public services, and stand as a record of the efforts of members of the Committee.
	I shall deal in some detail with the report on "The Management and Control of Hospital Acquired Infection in Acute NHS Trusts in England", which is of particular importance and a tribute to the Committee's work. I was interested in the remarks of my hon. Friend the Member for Croydon, Central (Geraint Davies) in that regard. His speech added to our understanding of the thought processes behind that report, and cast a searching light on some of the challenges for the health service.
	The Committee tellingly observed:
	"Hospital hygiene is crucial to preventing hospital acquired infection, including basic practice such as handwashing. We find it inexcusable that compliance with guidance on handwashing is so poor."
	Listening to my hon. Friends the Members for Croydon, Central and for City of Durham, I was struck by the fact that, over the years, with the decline of the Nightingale approach—the strict, disciplinarian, nurse-led approach to ward management—there has been growing concern about the increasing number of outbreaks of infection due to something as simple as whether nurses have washed their hands. Nurses believed that they had a disciplinary role in relation to everyone on the ward, whether they were a visitor, a patient, a doctor or a consultant. I cannot help but feel that the absence of that mindset has contributed to the failures that the Committee has vividly highlighted. It is important that the questions and analysis that the Committee asked and delivered continue to be applied to such problems.
	The Committee has reported on the NHS no fewer than five times in the period covered by these reports. That is a telling indication of how far the Committee shares with the Government a concern to improve that key public service.
	I was particularly struck by the Committee's report following the valedictory appearance of Sir Alan Langlands, the former NHS chief executive. I had the pleasure of serving in the Department of Health as an Under-Secretary of State during his tenure. He was a dedicated public servant and, in many respects, an inspirational leader. The report strikes an excellent balance between recognition of the progress being made to improve the NHS—it is undoubtedly being made, and we should pay tribute to it, as Members have indeed been good enough to do—and the need to identify, clearly and frankly, areas that still need attention.
	It goes without saying, although in fact it needs to be said, that all the Committee's recommendations are considered fully and almost all of them are implemented. As the Committee would expect, however, Departments and other public bodies do not and should not wait for its recommendations before acting, as many options for improvement will already have been identified by the preceding NAO report. A case in point is the 41st report, entitled "The Gaming Board: Better Regulation". The Gaming Board took full account of the NAO's report as soon as it was published in June 2000, and set in hand appropriate measures.
	The particular power of the Committee's own hearings and subsequent reports lies in the fact that they serve as a real stimulus to Departments and other public bodies to consider and, where desirable, implement the options for improvement identified by the NAO—which has been rightly dubbed Parliament's financial watchdog. Members in all parts of the House, particularly the hon. Member for Newbury (Mr. Rendel), emphasised that the NAO was an instrument of Parliament. That is an important point, which ought to give the wider public a sense of the significance of the Committee's work.
	The wider public will not, of course, see reports of today's debate that reflect its importance, because the press are simply not interested in debates of this kind. Both press and public, however, are interested in the Committee reports themselves, and in what the Committee's Chairman and members say while they are being published.

Richard Bacon: I was interested in what the Financial Secretary said about the NAO being responsible to Parliament. According to the front page of the NAO's website, the NAO is totally independent of Government, and reports to Parliament. I therefore find it odd that the web address is "nao.gov.uk". That may seem a small point, but would not "nao.parliament.uk" make more sense? Will the Financial Secretary suggest the change to the CAG?

Paul Boateng: That is an interesting point. Given the NAO's independence and its accountability to Parliament, I am not sure that it is for me to make the suggestion, but no doubt the NAO will take account of it. I must confess that I have not looked at the website; I must do so. The hon. Gentleman's point is perfectly reasonable, and will appeal to the techies and anoraks among us—not that I disparage in any way the hon. Gentleman's close attention to the details of websites.
	The challenge is to ensure that the public recognise the impact of the work of the NAO and the Committee on the minds of public servants and Ministers.
	We have had an interesting insight—I look forward to more—from the hon. Member for Tatton, who at the tender age of 24 had such wisdom and insight into the ways of the world that he was able to be a special adviser to a Conservative Minister. That may explain rather a lot, but he gave an insight from a political adviser's perspective of how the anticipation of an appearance before the Committee concentrated the minds of senior civil servants wonderfully. As a Minister with a rather different perspective, I share his view that the anticipation of an appearance does just that. Importantly, it gives the Department and Ministers an opportunity to think again and where necessary to make changes when it is clear that things are not going as they should.
	References have been made to the probation service and to information technology. I was prisons Minister in the latter part of that period. I well recall that, in some ways, the Committee's work and the NAO report came as a great relief, because they broke what had tended to become a rather internalised cycle of denial at the Department: that things were not as bad as some outside who had to do the work on the ground—probation officers—said it was. The NAO report and the work of the Committee played an enormously important part in ensuring that the changes were made that now enable us to deliver to the probation service the sort of IT back-up that it needs. It is important that we help the public to understand that, and I put on the record my gratitude as a Minister for the work that the Committee does.
	I commend the way in which the Committee comes back to check on progress in various areas where it has had concerns. That was particularly important in relation to the 13th report, entitled "The Refinancing of the Fazakerley PFI Prison Contract", in which I had particular reason to be interested as prisons Minister. I am a great believer—I make no apology for it, although I know that this view is not held by everyone—in the role that the private sector can play in the delivery of effective and humane prison services. The Committee's concern over the refinancing operation contributed to the drawing up of guidance for a more equal sharing of the gains of refinancing between the public and the private sector partners. That was to the benefit of the sort of partnership between the public and private sectors that we want.
	It was recognised that a problem needed addressing. It was addressed, and as a result the credibility of those partnerships has been enhanced. That was because the Committee worked in the way that it did. Its work and the public accountability that it enhances are rightly admired across the world. Indeed, that has been reflected in the speeches this afternoon.
	The role of accounting officer is pivotal to our structure of accountability and ensures that the head of each organisational hierarchy is personally accountable for its activities. This year, a number of officers have appeared before the Committee on a variety of issues. The Committee's reports have helped accounting officers to identify failings and gaps in departmental control systems. That is important, and it acts as a continuing driver for improvement. We must ensure that we learn the lessons of the past and improve the way in which the Government do business.
	For example, recommendations from the Committee have contributed significantly to changes in procurement practice and guidance. Those hon. Members of all parties who spoke about procurement and its importance were absolutely spot on. I know that procurement is of particular interest to the hon. Member for South Norfolk. I agree with him that, when we look back at the past decade or so, it will be clear that Governments have had to improve their procurement strategies. It has been a learning process, and the Committee has contributed to that.
	Several hon. Members referred to procurement in relation to the private finance initiative. I believe that the PFI has a real role to play, but I suspect—in fact I know—that my hon. Friend the Member for City of Durham is more sceptical. However, it is clear that the number of NHS beds that is delivered is entirely unrelated to the method of procurement. Whatever form of decision is taken with regard to the delivery of a new hospital or facility, it is clear that there has always been a debate and a tension about the number of beds that should be provided.
	That calculation can be got wrong under the PFI, but also under the old methods by which public investment was delivered. The important thing is to improve the procurement process, as a robust analysis will ensure that what is needed is delivered. We are still on a learning curve, but I am happy to say that the Government are getting better at procurement. That will benefit the public, and is likely to lead to the achievement of even greater value for money.

Richard Bacon: The Financial Secretary spoke of the robust analysis of PFI projects. In the December 2000 debate, the right hon. Member for Swansea, West (Mr. Williams) said that he was in favour of mortgaging assets in certain circumstances. He said that that had enabled many people to own their homes who otherwise would not have been able to. However, does the Financial Secretary agree that, when complex financial engineering is involved, a robust analysis must ensure that matters such as the discount rate are chosen correctly? For example, the Treasury is about to reoccupy a building that has been refurbished. The discount rate for that project was ludicrously high at 6 per cent. That had a fundamental effect on the apparent public sector comparator.

Paul Boateng: I am afraid that I am unable to agree with the hon. Gentleman. I fear that he may have shattered the happy mood of consensus that we were seeking to develop in the debate. However, there will always be a discussion, both post and ad hoc, about whether one has got it right. Time will tell. I think that the new Treasury building is great value for money. If the hon. Gentleman comes along to the opening, he will see for himself. Indeed, the whole Committee should come, but I fear that the fare will be much too simple for the hon. Member for Tatton.
	I should like to say a few words about resource accounting and budgeting. In December 2000, following the commencement of the Government Resources and Accounts Act 2000, the system of planning, controlling, monitoring and accounting public expenditure has moved on to a resource basis. That was the basis of some of the discussion when the Committee visited us in the Treasury building.
	From the outset, the Committee has supported and encouraged the more commercial approach brought about by the implementation of RAB, acknowledging that it should lead to improvements in the clarity and quality of financial information available to Parliament and assist with departmental management. As we reach the end of this financial year, we are seeing an increase in the number of ways in which the benefits of RAB are starting to be realised. In particular, improvements have been seen in departmental asset management, including disposals of surplus items—a massive task that would never have been achieved without the requirements of RAB, including the need to account for assets held.
	Resource budgeting is being expanded for the coming spending review—SR2002—representing a step change in the management of some £240 billion of Government- owned assets, better incentives for managers at all levels and a better measure of the full cost of providing public services.

David Rendel: Since the Minister has got on to the subject of disposing of assets, I wonder whether he knows whether the Passport Office has yet disposed of the 300 umbrellas that it purchased to protect those who were having to wait outside in long queues. When we asked why it was keeping them, the reply was, "You never know, there might one day be a power cut and everyone would have to go outside and wait in the rain—if there happened to be a storm at the same time as a power cut." That seemed a slightly dubious reason for keeping the umbrellas.

Paul Boateng: I must admit that the fate of the immigration and nationality directorate's umbrellas has not been brought to my attention. However, I promise to write to the hon. Gentleman about it—even as I speak, urgent inquiries are doubtless being made as to their whereabouts. I was in an office on the opposite side of the road at the time, and I recall that they came in very handy. One hopes and believes that they will never be needed again for that purpose, but who knows? In the scenario painted by the hon. Gentleman, they might be. We will certainly write to him about that.
	There is more to do in taking resource budgeting forward. It will place the UK among world leaders in public finance reform. There is a great deal of interest, not least among our European partners, in the progress that we are making in this area. I want to pay tribute to the permanent secretary and Treasury staff who have been engaged in this process, and to the front-line staff who are delivering it.
	The hon. Member for Rochford and Southend, East (Sir T. Taylor) and I recently visited the Customs and Excise facility at Southend. I saw the area where mail is received and the envelopes opened for VAT cheques. It was fascinating to talk to the dedicated and committed staff. Many of them had worked there for many years, man and boy—and, indeed, young woman and pensioner, because some had come back after retiring. They shared with me the complete revolution that had resulted from the introduction of a measure to deal with incoming envelopes. They were sorting out cheques that needed to be accelerated and banked immediately because of their size.
	There was great attention to the imperative of getting that money into the bank as quickly as possible. So when one listens to complex and technically challenging expositions as to what resource accounts and budgeting is, one should never forget that people are doing the business on the ground to deliver the benefits that it is so demonstrably delivering.

George Osborne: I am interested in the Minister's experience in Southend. During the months that I have served on our Committee I have long felt that it would be useful to have not just the permanent secretary of the Health Department, but also a doctor and a nurse to check what was going on, or not just the permanent secretary of the Ministry of Defence, but also a soldier. Perhaps we could look at that in the away day.

Paul Boateng: This away day gets more and more interesting. Quite how the top brass will take to a squaddie being dragged along with them to a Committee is a different matter. Joking apart, there is a serious point about following through the changes that occur at that level to their logical consequence on the ground.
	There is, of course, more to do. The resource accounts for 2001-02 will be qualified for a small number of Departments and we need to work hard to achieve the timeliness of accounting information that is routine in the private sector. The remaining problems arising are being resolved and we are confident that all of the benefits of RAB will be realised. I look forward to that and to seeing the impact of increased and improved information on the work of the Committee in due course. For perhaps the first time it will be possible to hold Departments to account for items such as their management of assets and working capital movements. We are beginning to see the fruits of that, as was made clear in the course of my exchange with the hon. Member for Newbury.
	I just want to say a few words about whole of Government accounts. Building on the principles adopted for resource accounts, the Government are moving rapidly towards the production of whole of Government accounts. Akin to commercial group accounts, whole of Government accounts will bring together all areas of Government work in a single account. The intention is to present a true and fair view of the Government's activities, providing a complete overview of the public finances for the first time. That will further improve accountability to Parliament and taxpayers.
	The Government are introducing whole of Government accounts in two stages. Accounts bringing together the activities of central Government bodies will be published in 2003-04, following dry run presentations in this financial year and 2002-03. Whole of Government accounts with full public sector coverage are to be published from 2005-06. We look forward to the continuing contribution of the PAC and NAO to the development of whole of Government accounts and to working with them on these matters.
	I shall say a few words on performance reporting. The Government have introduced significant developments in the provision of information about departmental performance. Tough, outcome-focused targets are set for each Department and are published in departmental public service agreements. The targets need to be met by Departments in return for additional investment. We had some interesting exchanges about targets this afternoon. The next spending review will build on the approach, setting targets focused on the Government's key priorities, linked to a prudent allocation of resources. We need to make sure that the information that underpins reporting on targets is reliable. We think that the introduction of independent validation would help to provide assurance on the quality and integrity of data systems. That is the importance of the working group established by my right hon. Friend the Chief Secretary to consider arrangements for improvements in the validation of PSA data systems. The National Audit Office, the Office for National Statistics and the Audit Commission have made valuable contributions to the group and the conclusions of the work will be announced in the Government response to Lord Sharman's recommendations in his report, "Holding to Account", about which I shall say more in a moment.

David Rendel: Does the Minister accept, in line with earlier remarks, that the law of unintended effect, which hits Government so often in all sorts of ways, is particularly likely to have a deleterious effect when the Government are setting targets? The Government set a target for one thing and almost invariably in order to meet that target create another problem.

Paul Boateng: I would not say "almost invariably". There is that danger and it must be guarded against in the setting of the targets. That is why information and analysis before the targets are set is so important. That danger is there, and one would be foolish to deny it. However, I would question the suggestion that targets are plucked out of blue air—or blue sky.

Nick Ainger: Thin air.

Paul Boateng: Thin air; I am much obliged to my hon. Friend. I have been present in the course of the conception, gestation and birth of targets and sometimes it is a prettier sight than others, but they are never plucked out of thin air. They never just appear out of the blue skies. They are the products of a laboured exercise. The important thing is to ensure that we get the mechanics of that exercise right—that we feed in the right information, conduct the right analysis and ensure that the evidence that underpins the targets is fit for the purpose. That is not always the case, and it is sometimes necessary to revisit them. However, the hon. Gentleman makes a fair point of principle and it is important to have regard to it.
	I said that I would say something about Lord Sharman's report and hon. Members on both sides would be disappointed if I did not. As my predecessor—now the Minister for School Standards—and colleagues explained in debate in the House and the other place during the passage of what became the Government Resources and Accounts Act 2000, the Government have never objected in principle to extensions to the statutory powers of the Comptroller and Auditor General in relation to audit and access. The importance of independent audit is well recognised as a key accountability tool, and access to information associated with an audit is essential for the Comptroller and Auditor General. Our concerns focused on the practicalities of change, particularly how to avoid undue burdens for the private sector if non-statutory access rights became statutory, and the need for assurances about the quality of audit if competitive influences were removed.
	The Government welcome Lord Sharman's recognition of those concerns and the need for them to be addressed through protocols between the Government and the Comptroller and Auditor General. Following publication of the report, my officials have had productive discussions with the Comptroller and Auditor General's officials on the content of those protocols. I am enormously grateful for the constructive way in which the NAO has approached those discussions. In the light of the assurances that we have received, I hope that it will be possible to make a positive response to the recommendations.
	We are grateful to Lord Sharman for considering audit and access, and for his views on accountability more widely. We have taken time to consider Lord Sharman's recommendations, as they do relate to issues that were for a long time a source of intense and stimulating debate.
	The hon. Member for Gainsborough (Mr. Leigh) will be glad to hear that our consideration of the recommendations is now nearing completion and my right hon. Friend the Chief Secretary hopes to publish the Government's response to Lord Sharman's report shortly. We hope to respond positively.

Richard Bacon: Will the right hon. Gentleman give way?

Paul Boateng: I think that I have given way sufficiently.
	I do hope that I have given hon. Members, particularly the sceptics among them—they are members of the Committee so, by definition, they are all sceptics—the sense that we do intend to respond positively. I trust that our response will signal the end to long-running disagreements over many years, during the terms of office of many Governments of all political persuasions, between Government and Parliament.
	It has been an important debate. It has not been possible in my response to cover all the arguments that hon. Members made. They made some very important points about risk management. We are glad that the Committee continues to welcome the improvement that has been made in risk management processes in Government. We are continuing to improve the management of risk and to develop statements of internal control.
	A progress monitoring exercise is being planned for the spring to assess progress in developing internal control systems and to identify issues on which Departments will need further support and guidance to help them to complete the effective implementation of that policy. The Committee's role has been enormously important. It has brought to light valuable evidence of strengths and weaknesses, and it has played a similar role in the promotion of innovation. Risk management is crucial if we are to promote innovation in the delivery of public services. If everyone is risk averse, necessary improvements are not likely to occur.
	Our long-term goal is to deliver world-class public services through investment and reforms that ensure that taxpayers receive good value for money. The work of the Committee and the contribution of its Chairman, members, advisers, staff and Clerk—with the NAO—is crucial to achieve those goals and, indeed, to the very purposes of Parliament. Scrutiny is absolutely central to Parliament's role; it drives improvement and helps to ensure that regard to regularity, propriety and value for money is given in all aspects of Government projects and operations.
	We are enormously grateful not only to hon. Members for the contributions that they have made today and to those hon. Members who have taken the time to attend for all or part of the debate, but to the Committee for its on-going work. We look forward to continuing to work closely with the Committee, to being challenged by its scrutiny and to the public receiving an improved service as a result.

Edward Leigh: With the leave of the House, may I briefly thank, on behalf of the members of the Committee, my hon. Friend the Member for Aylesbury (Mr. Lidington) and the Financial Secretary, who has shown his characteristic skill and humour, for summing up this debate? I apologise to the Financial Secretary for the fact that he has not been invited to our away day. I will certainly issue an invitation if he can promise to turn from gamekeeper to poacher for a day.
	I am reminded of a recent conversation that I had with an NAO official. I was double checking that none of the illustrative questions prepared for Members are ever given to permanent secretaries or their staff. Of course, the members of the Committee are independent; they ask their own questions. The NAO official, who used to work for the Treasury, told me with great glee that the Clerk of the Committee once made a mistake and sent the illustrative questions to the Financial Secretary, and that they were then promptly distributed all around Whitehall. Although the Financial Secretary is a member of the Committee, we have an interesting relationship with him. We have a very good dialogue.
	I do not think that any hon. Member has thanked those who are currently sitting in the place to which no reference must be made. They always attend PAC meetings. Sometimes, after perhaps an hour or two when they have not had to say anything, a Member will fix an eagle eye on them and ask a question, and they immediately come up with a good response.
	I thank the Financial Secretary, my hon. Friend the Member for Aylesbury—the Opposition spokesman—and the hon. Members who have spoken in the debate. I thank the hon. Member for City of Durham (Mr. Steinberg), who feels so strongly about the NHS, and the hon. Member for Croydon, Central (Geraint Davies), who dealt so expertly with the PFI, the NHS and the railways.
	I thank my two new colleagues—my hon. Friends the Members for South Norfolk (Mr. Bacon) and for Tatton (Mr. Osborne)—who have been so keen and determined to get to the nitty-gritty. As my hon. Friend the Member for Tatton said, they have led the way in the charge against arbitrary targets. My hon. Friend the Member for South Norfolk is, of course, a management consultant, so he is ideally placed in this Committee.
	I also thank those hon. Members who have not spoken today—my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), who listened carefully to the debate, and the hon. Member for Tamworth (Mr. Jenkins), who attended the earlier part of the debate. I particularly thank my right hon. Friend the Member for Swansea, West (Mr. Williams)—he really is a friend. His work is a tremendous tribute to the House. He has given a generation of service to what is not a bipartisan but tripartisan Committee, as shown by the welcome presence of the hon. Member for Newbury (Mr. Rendel) in the debate. Without the work of the right hon. Member for Swansea, West, the Committee would not work in the way that it does.
	I read a report in a national newspaper that is usually sceptical—indeed, downright rude—about Parliament. It said that the Committee was one part of Parliament that was deeply impressive. I hope that, in the time that I am the Committee's Chairman, I can maintain that fine tradition.
	Question put and agreed to.
	Resolved,
	That this House takes note of the 38th to 47th Reports of the Committee of Public Accounts of Session 1999–2000, of the 1st to 16th Reports of Session 2000–01, and of the Treasury Minutes on these Reports (Cm 5021, 5071, 5078, 5127, 5201 and 5261).

FAIR TRADE CHOCOLATE

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ainger]

Linda Gilroy: May I say how pleased I am to have secured this dabate and to be able to talk about my involvement with Fairtrade chocolate and cocoa, which began by chance. I had gone for a break at lunchtime in Victoria street and went to The Body Shop to purchase a few cosmetics. However, I succumbed to the temptation of what I believe is called an impulse buy. Next to the cash machine was a cleverly sited row of chocolate bars and, as I am a self-confessed chocoholic, my hand strayed towards them. I added one to my purchases.
	It did not take long to investigate the contents of the bar. It was so good that I was prompted to investigate the wrapper and I then discovered that Divine chocolate was a Fairtrade product which is supported by Christian Aid and Comic Relief as well as The Body Shop and the Department for International Development. It is the product of The Day Chocolate Company, which is based in the United Kingdom and is part-owned by a co-operative of Ghanaian cocoa growers.
	Later that day, while having a cup of tea—Fairtrade, of course—with my hon. Friend the Member for Bristol, West (Valerie Davey), I asked her whether she had come across fairly traded chocolate. She knew it well, having helped to launch it in her constituency. In fact, there are "Divine cities" that co-operate with The Day Chocolate Company to market the product the length and breadth of the United Kingdom, but I am not sure whether Bristol is one. As we left a cafeteria in the House, we put a comment in its book. "We have Fairtrade tea and coffee. What about Fairtrade chocolate? Divine chocolate is yummy!" Shortly after, a note appeared to say that the brand was "being investigated" and, in February 2001, Divine chocolate arrived next to the cash tills in the House of Commons. An early-day motion on the Order Paper welcomed its advent and quickly attracted signatures from many hon. Members.
	Fairtrade has a good and growing track record across a range of products sourced from countries across the world. The fair trade movement is well under way in the United Kingdom and there are currently more than 90 Fairtrade Mark products. They range from bananas to tea and chocolate. In fact, a recent survey suggests that the majority of people would prefer to buy Fairtrade Mark products.
	Backed up by the Fairtrade Foundation, the Fairtrade Mark is an independent guarantee of terms and conditions. They include a guarantee of a secure price above market price for the raw material, an extra social premium, long-term trading contracts, decent health and safety conditions and a commitment to support community programmes aimed at empowering farmers to increase their abilities to be self-sufficient.
	On a visit to Ghana this summer, I learned the story of Kuapa Kokoo, the farmers' co-operative that produces the cocoa used in Divine chocolate, and how it has taken the concept of fair trade a step further. Kuapa Kokoo is linked to The Day Chocolate Company in the UK and owns one third of the company's shares. This unique arrangement means that the producers are able to play an active role in decisions about how Divine is produced and sold as well as to share in the profits. Consequently, cocoa growers will receive more than the fair trade premium and very soon, when the company reaches the profit stage, the profit from the end product will start to flow back to Kuapa Kokoo and its farmers.
	Cocoa is at the heart of Ghana's economy and everything has developed on the back of it—its roads, hospitals and schools. In the late 1970s, the price of cocoa plummeted by two thirds. Droughts and fires in the early 1980s caused further damage and the economy was devastated. The World Bank and the International Monetary Fund intervened and advised that liberalisation of the cocoa market would be necessary to rescue the economy. Kuapa Kokoo was a response to the Ghanaian Government's policy to liberalise the internal market in 1992 in response to the advice of the World Bank and the IMF.
	Farmers, led by the late Nana Frimpong Abebrese, and with help from the British non-governmental organisation, Twin, were behind the move. Abebrese was the farmers representative on the executive board of the directors of the Ghanaian cocoa marketing board. He was concerned about what would happen to the cocoa farmers after liberalisation of the cocoa market, fearing greatly the entry of the private market. He saw the need for the farmers to have their own organisation to participate in cocoa trading and set out to establish that with the help of Twin, which provided the finance for Kuapa's establishment, as well as technical support and contact with the fair trade partners in Europe.
	By trading their own cocoa, the farmers are able to manage the selling process more efficiently than the Government agents, and thus receive more of the profits. Kuapa Kokoo prides itself on transparency and democracy and sets itself high standards in its business practices. It uses accurate weighing scales that can be understood by the farmers and all the decisions affecting farmers are made by elected representatives. Kuapa Kokoo trains farmers to weigh and bag their own cocoa, which not only contributes to the end result of the farmers receiving more per sack than they would from other buying agencies, but provides them with useful skills. In addition, at the end of each year farmers receive a cash bonus per sack from profits.
	My visit took me on a four-hour journey from Accra to Kumasi, a large town in the Ashanti gold-mining region of Ghana, where Kuapa Kokoo's headquarters are based. Kuapa Kokoo is a thriving co-operative that is composed of five main units: the Kuapa Kokoo farmers union; Kuapa Kokoo Ltd., which is a farmer-owned private licensed cocoa buying company; Kuapa Kokoo farmers trust, which receives and disburses moneys from the fair trade premiums and other funds meant for farmers; and the Kuapa Kokoo credit union, which was established in 2000 to promote savings and enhance development. When I visited last year, the credit union already had 8,000 members. Hon. Members who have credit unions in their constituencies will know that that is a considerable achievement in such a short period of time. The fifth main unit is The Day Chocolate Company, which was set up in 1998. It arranges the manufacture and marketing of Divine and Dubble chocolate bars in supermarkets across Europe.
	Kuapa Kokoo's strength comes from the participation of more than 35,000 ordinary small-scale farmers at village level. There are 750 villages in the co-operative. My encounter with one such village, Fernaso Domeabra, which in the Twi language translates as "If you love me, you will come to me", was an inspiration. Thanks to the Kuapa Kokoo fair trade connection, the village has a water project. The women and children no longer have to travel miles to collect water, which took up the best part of the day and left little time for education or for diversifying productive activity.
	The village is one of several societies in the union in which women have developed an additional income- generating activity, in this case extracting palm oil, which helps to keep them going in the six months of the year outside the cocoa harvesting season. It also gives the farmers an income to supplement what they receive from fair trade and diversification, although they receive only about $50 a year. It is breathtaking to consider that the children's school fees are paid from such low incomes.
	At an hour-long meeting with the co-op, the members' questions to me were very pointed. Why did the international buyers dictate the price of cocoa? What could I do to help with another water project? Some farmers from a village that does not have a water project had travelled four miles to meet me. They talked about the need for better health, and their solution, a health clinic, needed my support. When I later visited the farm of one of the women cocoa growers, I could see that snake and scorpion bites and cuts from large knives could cause death if not attended to fairly quickly. I could clearly see why a clinic was a top priority, along with a palm fruit-crushing machine, for which a plea was made by the women's leader.
	I should explain that palm fruits grow in a cluster, and each tiny fruit has to be taken and crushed with a stone before it can be mashed to produce oil, so it is no wonder that the women wanted a machine to do it for them. That is a daunting shopping list, but one that they now have the capacity to tackle for themselves, thanks to the vision of the four people who worked to found their co-operative, Kuapa Kokoo. Almost half the people whom I met that day must have been under the age of 12. Within their lifetime their aspirations can be achieved in a sustainable way, and by their own efforts and those of their elders.
	As a Labour and Co-operative MP, I spoke to the village elders about the Rochdale pioneers, founders of the UK retail co-operative movement over 150 years ago. I told the story of how the mill workers had started with a small initiative of setting up their own shop to avoid exploitation by the mill owners, who had started to adulterate with chalk the flour that they were selling in their shops to the workers. The mill workers' initiative was greatly expanded within the lifetime of their children from its small beginnings in Toad lane. Among their achievements is what is now the Plymouth and South-West co-operative society, of which I and several hundred thousand people are members. The society drew on the advice of a Rochdale pioneer who took the trouble to visit the 10 men in Plymouth who founded it some 150 years ago.
	I am not sure that the people of Kuapa Kokoo believed me, but I believe that the seeds of co-operation which they have planted can produce similar dividends. The most effective thing that anyone can do to help them in their quest to improve their quality of life is to make sure that The Day Chocolate Company thrives. The people will then get not only a fair trade premium for the raw cocoa, but a share in the profit of manufacturing the end product. From little cocoa beans, bigger harvests may ripen.

Mark Lazarowicz: I am obliged to my hon. Friend for agreeing to take an intervention, and I congratulate her on securing the debate. She has explained that the benefits of the initiatives that she describes not only apply to the chocolate producers but are potentially much wider. Will she join me in welcoming the fair trade fortnight between 4 and 17 March this year? Will she join me in urging Members of the House to support that fortnight in whatever way they can, and also in urging the Government to encourage Departments and the civil service to assist that welcome initiative?

Linda Gilroy: I thank my hon. Friend for that relevant intervention. I certainly urge hon. Members and everyone who has a part to play in encouraging fair trade to take part in that event. I am pleased to tell my hon. Friend that two of the cocoa growers, Mary and Comfort, will be coming to Britain during that fortnight. They will visit Plymouth to meet some of the Plymouth and South-West co-operators, and go down to the Eden project in Cornwall where there is a tropical house containing, of course, a cocoa plant. I understand, although I have not yet visited it myself, that attached to the plant is a plaque referring to this project.
	As a means of achieving a more balanced trade relationship between north and south, this end-to-end stakeholding by the producers of the raw material has a lot to offer. Not only does it seem set fair to increase their profits, but through having a say in how the chocolate is produced and sold, they increase their knowledge of the fiercely competitive European and western chocolate markets. A quick look at the notes of guidance as to what is involved in growing and harvesting cocoa, which I saw for myself when I visited the farm of a woman grower, shows why a cocoa grower deserves a fairer share of each bite of chocolate that we eat. It takes patience and exposure to considerable danger to establish and grow the golden pods, and harvest them for market. Waiting five years and risking snakes, scorpions and tetanus is definitely worth more than a fair trade premium in my book.
	Kuapa Kokoo can get its members a better deal on all their cocoa, but they particularly benefit when their cocoa is sold to Fairtrade companies. Fair trade guarantees the farmers a minimum price for their cocoa of £1,666 a tonne and £66 a sack. That minimum price is intended to cover at least the costs of production, providing the co-operative with some security. Fairtrade companies also guarantee long-term trading contracts to the farmers. By contrast, Kuapa Kokoo farmers earn only £600 a tonne and £37 a sack when they sell their cocoa to conventional companies in other countries, and are not guaranteed long-term trading contracts.
	Fairtrade companies pay an extra premium or bonus of £100 a tonne or £6 a bag to be used for community projects such as the water wells that I described or new toilets; it can also be given directly to the cocoa farmers to improve their income. When dealing with Fairtrade companies, the farmers are assured that the process for buying and selling produce is clear and fair. Unfortunately, although all its cocoa meets the required Fairtrade standard, Kuapa Kokoo can only sell a proportion of its cocoa, as little as 2 per cent., to Fairtrade companies because there is not yet enough demand. Only now are fairly traded chocolate bars becoming available in the shops on any scale.
	Large international companies dominate the chocolate market in the UK, which is worth £4 billion; the European chocolate market is worth £14 billion, so it is a big market. Taken together, familiar names such as Cadbury, Mars, Nestlé, Suchard and Jacobs account for well over 80 per cent. of the retail market in chocolate confectionery. Competition between them ensures that their products remain innovative, strongly promoted and keenly priced, making it difficult for smaller companies such as Day to compete. Nevertheless, The Day Chocolate Company is doing well in integrating its product into the mainstream market. The Dubble chocolate bar is priced evenly with other similar products at 35p; the Divine chocolate bar is priced only slightly higher than comparable chocolate bars. At £1.19, Divine's newest product, Darkly Divine, with a substantially larger proportion of cocoa in the ingredients, will also be competitively priced. Because of the competitiveness of the western and European chocolate market, it is difficult for Day to maintain low prices and still return as much profit to the cocoa growers as it would like. The company is only now set to go into profit.
	Despite the success achieved through advertising campaigns, competitive pricing and so on, Day still faces obstacles to assisting Kuapa Kokoo and furthering the objectives of fair trade. Certain trade tariffs make it difficult for Day to break into the western chocolate market while maintaining fair trade relations and facilitating the involvement of Kuapa Kokoo at all levels of production. Developed countries tend to maintain much higher tariffs on imports of processed commodities than of raw materials. It is therefore much easier for Ghanaians to sell cocoa to Europe than chocolate bars; in the European market, there is no tariff on cocoa, but the duty on chocolate can be as high as 27 per cent. If that tariff were reduced or removed, Day could undertake more processing of the product in Ghana, allowing the producers to be more involved and to gain more profits. Another impediment to Day's efforts to facilitate fair trade is the import duty on sugar. At present, it is not feasible for The Day Chocolate Company to use fairly traded sugar in its chocolate and bring out a mainstream-priced product. With the reduction of that tariff, Day could count fairly traded sugar, along with fairly traded cocoa, among the ingredients in its products.
	I pay tribute to my hon. Friend the Under-Secretary of State for International Development. I am pleased that my hon. Friend the Member for Wolverhampton, South-East (Mr. Turner) has attended the debate, because it was with his help as Chairman of the Catering Committee that we managed to get those products into the House of Commons Tea Room, the Terrace Cafeteria and Portcullis House. I also pay tribute to the Minister and his colleagues for the Department's support for fair trade in general and the work of The Day Chocolate Company and the Kuapa Kokoo project.
	I have a small shopping list to which I hope the Minister will respond. Fair trade arrangements are still very small in relation to such markets and I hope that he can report on positive progress from the recent Doha talks that will not only help the cocoa trade, especially in Ghana, to thrive, but will also help fair trade arrangements in general to prosper. In particular, I would welcome his comments on the chocolate tariff and the sugar duty. I hope that he will join me in recognising the value of this special project.
	The company's slogan is "Pa Paa Pa", which is Twi for "Best of the best". I believe that the Kuapa Kokoo project is unique in terms of the way in which developing world producers can not only receive a fair and ethical treatment from buyers of the raw material, but have a stakeholding in the manufacture of the end product. I hope that the Minister will join me in recognising the value of the project not only in its own right, but perhaps also as a model for building a better relationship with traders in developing world countries, to whom we certainly need to give extra consideration in the wake of 11 September and if the aspirations in the plan for Africa are to be met.
	Finally, I hope that in responding positively to my shopping list, the Minister will make Divine chocolate a regular feature of his own.

Valerie Davey: I warmly congratulate my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) on securing this debate and on highlighting the importance of fair trade. I echo the request of my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) with regard to bringing to the attention of the House the forthcoming fair trade fortnight, in which I am sure that many hon. Members—and I hope the Minister—will be actively engaged.
	I assure my hon. Friend that Bristol is indeed a divine city. It is a wonderful city, but it is quite specifically a Divine chocolate city. It is one of those cities to which The Day Chocolate Company came to launch its product—something about which I shall speak further in a moment. The city encourages fair trade in many ways, but I should like to mention two aspects that illustrate the importance of specific projects. The community of Bishopston in Bristol is linked to Kuppam in India. That community link or twinning arrangement has brought about the establishment of a shop on the Gloucester road where a wide range of Indian textiles and colourful clothing is now available. Also, one of the Oxfam shops in Bristol is designated for fair trade. A large variety of fair trade goods is available in that shop.
	I think that the momentum of what my hon. Friend said relates to the importance of getting fair trade produce—in this case, the produce of The Day Chocolate Company—into the mainstream market, so that we can go into our shops and into the supermarket and pick up this most wonderful product. I have been introduced only today to the Darkly Divine chocolate bar. I hope that my hon. Friend the Member for Wolverhampton, South-East (Mr. Turner), the Chairman of the Catering Committee, will recognise it as an addition to the products sold in Portcullis House and the other outlets in the Palace, and as the company's dark chocolate brand. We hope that all the products will be more widely accessible, as that is the only way in which the wider public will recognise the importance and value of fair trade.
	Let me turn briefly to the launch in Bristol. The Day Chocolate Company held the event at the Hotel Du Vin, which is now well known in Bristol and is newly established in a very old building—the old sugar house. As one enters the building, one is reminded that, in the olden days, looking out through the archway, one would have seen the masts of the ships coming into Bristol with sugar, which prompts thoughts of the unfair trade on the basis of which we are conscious—perhaps now more than ever—that our city developed. That unfair trade was in sugar and slavery. It was poignant to be able to launch Divine chocolate—a fairly traded product—there, knowing that the cocoa growers were part of the company's management. It felt as if things had come full circle, from unfair to fair trade.
	An increasing number of people in the country are aware that that is the way forward. Working with partners throughout the world to establish fair trade, whereby growers, producers, conveyors and buyers are part of something that works to our mutual benefit, is at the core of what my hon. Friend the Member for Plymouth, Sutton and those in The Day Chocolate Company stand for. I respectfully suggest that the Minister and the Department also think along those lines. I look forward to his response to the debate.

Hilary Benn: First, I congratulate my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) on securing a debate on such an important issue. I know that she takes a strong personal interest in fair trade—that was evident from her remarks—and I greatly enjoyed reading the report that she produced on her visit. She kindly sent me a copy of it, complete with photographs, which brought it to life.
	I confess that I discovered the delights of Divine fairly traded chocolate when, early in my ministerial career, I opened my Red Box to discover a couple of bars enclosed with some material about the product and the company that produces it. At that moment, I viewed my new responsibilities in a completely different and more relaxed light. At the end of last year, I attended Dubble's first anniversary celebrations. It was a happy and enjoyable occasion.
	Fair trade is a small but significant part of the international trading system. Its aim is simple: to ensure that small and medium-sized producers are able to receive a fair price for their products and thus earn a living in an increasingly international market. In doing that, it tries to create a more equitable trading partnership between north and south.
	The growth in sales of fairly traded products in developed countries has been dramatic, albeit from a low base. It has averaged 30 per cent. a year in recent years. Sales in the United Kingdom totalled £23 million in 1999, with chocolate, tea, coffee and, most recently, bananas accounting for most of that. I understand that Day Chocolate is stocked by all the major multiples—Tesco, Sainsbury's, Safeway, Waitrose, Asda, Somerfield, Morrisons, Boots and the Co-op—as well as Blockbuster Video, independent garage forecourts, and Shell.
	Day has recently been active in promotional ties with the National Union of Students, the Nickelodeon children's cartoon channel, and the student and children's press. All that effort matters, because as my hon. Friend said, the product has to prosper in a strongly competitive market.
	There is every indication of the trend continuing. As consumer demand increases, and a growing number of customers want to buy fairly traded goods, I hope that more fairly traded products can become available. Towards the end of last year, I met the Fair Trade Foundation to learn about its work. One of its initiatives is to increase the range of goods that have the Fairtrade label.
	Through FLO—the European fair trade labelling organisation—a new process for assessing goods against the Fairtrade standard has been agreed. It is hoped that that will significantly increase the range of goods that can be certified. I echo the comments of my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz), who is unfortunately not in his place, about the importance of the fair trade fortnight. I look forward to having the opportunity to support it.
	Fair trade has yielded many benefits over the years in the UK and in developing countries. There are opportunities to achieve more, but also challenges to be faced. The story that we have been debating—that of fair trade chocolate, Kuapa Kokoo and The Day Chocolate Company—clearly illustrates the achievements and the challenges.
	Ghana is justifiably famous for its high quality cocoa production. It dominated the world cocoa market in the 1960s, but despite a peak in world prices, production fell dramatically in the 1970s and early 1980s. This was largely due to the taxation rate, which resulted in a decrease in industry incentives. Cocoa accounted for more than 75 per cent. of Ghana's export earnings in the 1970s, but for just under a quarter by 1992.
	At this time, the Government of Ghana began to liberalise the internal marketing of cocoa. As we have heard, a group of local farmers formed the Kuapa Kokoo farmers union to provide a way of improving the economic and social position of cocoa farmers. Technical support from the UK was provided by Twin Trading, and financial support by the Department for International Development.
	Kuapa Kokoo is now 10 years old and, like the British co-operative movement, it has gone from strength to strength. I was greatly stuck by the analogy drawn by my hon. Friend the Member for Plymouth, Sutton between the work being done at Kuapa Kokoo and the origins of the co-operative movement in this country. Kuapa Kokoo is the only major cocoa-producing co-operative in Ghana; it now has 35,000 members and it exported more than 30,000 tonnes of cocoa last year. It is also the largest supplier of fairly traded cocoa in the world, providing almost two thirds of the international supply. It is estimated that over the eight years of its operation to 2000, Kuapa Kokoo has yielded £600,000 in extra income to its members, over and above world market prices.
	The benefits of the co-operative are more than just economic, however. Last year a DFID-funded study reported on these benefits and in particular assessed the extent to which they could be attributed to fair trade. The study found that while Kuapa Kokoo fair trade sales have ranged between 2 and 9 per cent. of total sales, the support of the fair trade movement has had a disproportionately positive impact on its members. Indeed, Twin Trading played a key role in organising and developing the co-operative in its early years to take advantage of both fair trade and mainstream commercial markets.
	The premiums from fair trade sales fund many of the social services provided by Kuapa Kokoo, including health, education, the credit union to which my hon. Friend referred, water and sanitation. For example, more than 100,000 people—both members and non-members of Kuapa Kokoo societies—have received free medical attention and prescriptions. My hon. Friend also mentioned other benefits in terms of new skills and involvement in decision making.
	Kuapa Kokoo has not rested on those achievements, however. Ghana has yet fully to liberalise cocoa export marketing, and state control over export marketing means that prices paid to producers remain relatively low. Kuapa Kokoo was keen to increase the value added to its cocoa, as well as its understanding of global markets. To address both those objectives, it decided to produce its own branded chocolate for sale in western markets. Together with Twin Trading and The Body Shop, and with support from Comic Relief and Christian Aid, it formed The Day Chocolate Company.
	The Day Chocolate Company is an ambitious and innovative venture. Unfortunately, the banks perceived it as too risky to finance it themselves. To overcome this problem, DFID provided a bank guarantee until September 2004 to enable a commercial bank to provide £400,000 of loan finance. In doing this, DFID was aiming to lower the perceived risk of similar ventures, and thereby to encourage further participation of private financial institutions in fair trade initiatives, and in development more generally.
	The Day Chocolate Company is an award-winning organisational model of partnership between producers, a fair trade organisation and an ethically minded business. It has been successful in helping to promote fair trade through sales and distribution via 15,000 outlets, many of which had never stocked fairly traded items before; through highly impressive media exposure, which is important given the lack of a large budget for advertising; and through innovative development educational activities which are reaching more than 4,000 primary schools and more than 1,700 secondary schools. Kuapa Kokoo has a one-third shareholding in The Day Chocolate Company, and its two elected farmer board representatives give it a new level of involvement in, and understanding of, the global cocoa supply chain.
	The case of Kuapa Kokoo and The Day Chocolate Company highlights a number of wider challenges and opportunities for growing trade in both developing and developed countries, and it is to these that I now wish to turn. First, developing country Governments must continue to improve the legal and regulatory environment for processing agricultural products, private sector development and foreign direct investment. If business is to flourish—we know what an important part economic development plays in lifting people out of poverty, which is what we are concerned about—it needs the right climate.
	Secondly, the private sector in developing countries needs to enhance its international competitiveness. For example, Ghana is moving to liberalise export marketing of cocoa. By virtue of the technical and marketing capacity that Kuapa Kokoo has built up through Fairtrade and its partnership with The Day Chocolate Company, it is likely to be one of only three companies licensed to export in Ghana.
	Thirdly, Ghana and other countries may export raw cocoa to Europe, but they face tariff barriers if they want to export processed chocolate. The Department and other donors are working with developing country Governments to strengthen their negotiating power in trade talks.
	Fourthly, Fairtrade and other companies promoting trade with developing countries face intense competitive pressure, particularly as they tackle mainstream commercial markets rather than traditional fair trade markets. Such companies are often dwarfed by their competitors' size and advertising budgets, while consumers may not always convert a desire to support Fairtrade into purchases. The Day Chocolate Company, cafédirect and others are showing that innovative marketing and distribution can lead to success.
	Fifthly, we need to recognise the link between fair trade in particular and corporate social responsibility more generally. A growing number of companies are becoming interested and involved, and the ethical trading initiative helps them to do business in a more socially responsible way. As the public become more aware of the connection between the way business is done and its impact on the livelihoods of people in developing countries who are trying to earn a living for themselves and their families, so the pressure for greater business awareness will grow, and rightly so.
	My hon. Friend the Member for Bristol, West (Valerie Davey) spoke about the links that have been developed between the city that she represents and organisations in her community. As in a number of cities in this country, shops selling fairly traded products are opening.
	The issue of fair trade shows how important trade in general is to developing countries. Compared to the UK market for Fairtrade products—the £23 million to which I referred—the total market for such products is £15 billion a year. We must therefore help developing countries to increase their trade and economic activity through international trade agreements. Here, of course, reform is of the highest importance.
	That is why the everything but arms agreement is a major step in the right direction towards building fairer competitive markets for agricultural trade between Europe and developing countries, and why the Government are pushing for significant common agricultural policy reform in relation to sugar and other agricultural products, although we know that progress has been slow. To be honest, Members have been debating CAP reform in the Chamber over the past quarter of a century, owing largely to opposition from domestic agricultural interests in continental Europe.
	That is why a new trade round—a development round—matters so much following November's Doha agreement. The Doha declaration is encouraging, as it commits World Trade Organisation members to the objective of duty and quota-free access for the least developed countries and puts agricultural trade firmly on the agenda for the world trade negotiations. That is why we were so keen to have a new trade round. Without a new round, there is no possibility of reform and we expect tariff reductions that favour developing country exporters.

Linda Gilroy: In common with many other Members, I have received a lot of letters from people at non-governmental organisations who suggest that the world trade round should not go ahead until the rules are changed. Will my hon. Friend say more about that? The proposal is misguided and mistaken in terms of helping people such as those we are discussing.

Hilary Benn: That is an important point. The proof of the World Trade Organisation's success will be in creating terms of trade that are fair and equal and allow economic development across the globe. Members will be only too conscious of the obstacles that are placed in the way of developing countries in trying to achieve that objective, and agricultural protection is the biggest obstacle of all. The single most significant step that we could take through the WTO talks to help developing countries would be to reduce the agricultural protectionism to which I referred. The simple truth is that, if there is no new trade round, there will be no possibility of negotiating that improvement.
	The test will be the extent to which those talks produce the development round and the liberalisation in agriculture to which all hon. Members present are committed. I hope that that will allow us to make progress on tariffs on sugar and chocolate.
	Last night, the House gave a Third Reading to the International Development Bill, which puts poverty reduction at the heart of what we are trying to achieve. In truth, we can do no other if we are to have a chance of reaching the millennium development goal of halving the proportion of people living in extreme poverty by 2015. Creating a fairer international trading system that helps to make global markets work better for the poor, so that developing countries can maximise the opportunities and minimise the threats that arise from that global market, is of the greatest importance. In doing that, supporting small and medium-sized producers to compete effectively in international markets, including the fairly traded market, will matter a great deal.
	I am genuinely grateful to my hon. Friend the Member for Plymouth, Sutton, because she has done the House a service in raising this matter. She went to Ghana to find out about this problem for herself, and took the trouble to report to the House and secure this debate. In so doing, she has given us the chance to discuss an important subject.
	Finally, I can honestly say that I have never participated in a debate in the House that has aroused such anticipation of gastronomic delight. It is to the eternal credit of my hon. Friend the Member for Wolverhampton, South-East (Mr. Turner) that any Members present in the Chamber who find it difficult to resist such temptation will now be able to repair to a Room close by and enjoy the delights of the product that we have just debated.
	Question put and agreed to.
	Adjourned accordingly at seventeen minutes past Six o'clock.